RIO DE JANEIRO, BRAZIL – The current state of Argentina’s economy, and President Cristina Kirchner’s political leadership of the country, are affecting Brazilian exports even more than the financial crisis in Europe. Total exports dropped by R$12.3 billion (US$6.1 billion) year-on-year during the second quarter of 2012, with the slump in Argentinian demand for Brazilian products accounting for 32 percent of the decrease – just under US$2 billion, figures show.
European Union countries have been buying 27 percent less, equal to US$1.67 billion in missed sales for Brazil.
Demand has been subdued across the range of exports from Brazil, but industry has been badly affected – particularly capital goods (products used in the production of other goods) and durable goods, including cars and domestic appliances, sixty percent of which have been bought by Argentina in the past.
Experts are warning that, even with stimulus packages by the Brazilian government – due to bear fruit in the second half of 2012, if demand is down, it will undoubtedly have a knock-on effect for Brazil’s chances of growth.
It is being reported that Argentina has deliberately reduced its imports from Brazil and implemented trade restrictions, meaning business between the two countries is becoming increasingly difficult.
Argentinian companies are also said to have switched suppliers to benefit from cheaper products from China.
The long-standing, complex relations between Brazil and Argentina have, in recent years, been repeatedly called the best in the two countries’ history, with Presidents Rousseff and Kirchner sharing a good personal relationship.
However with Argentina shunning its northern neighbor’s trade, some will undoubtedly soon be questioning whether President Kirchner’s commitment to a “deepening” of Argentina’s strategic alliance with Brazil is more than just words.
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