Argentina’s role in Brazil’s exports has sharply decreased, reaching a historic low of 3.5% in the first half of the year.
This figure, the lowest since 1991, represents a significant decline from over 10% two decades ago.
Argentina now positions below major partners like China, which dominates with 30.9%, and the U.S., which holds 11.5%.
European nations such as the Netherlands and Spain are close to Argentina’s reduced share.
The decline is mainly due to two factors in 2024. First, a steep drop in soybean exports occurred, following Argentina’s agricultural challenges last year.
Consequently, the value of Brazilian soy exports to Argentina fell drastically to $61.6 million from $1.548 billion. This highlights a severe trade imbalance.
Milei’s drastic reforms, like ending the Central Bank and dollarizing, didn’t stop a 5.1% GDP drop in Q1, signaling a recession.
Economic woes reduced Brazil’s car exports to Argentina from $858.5 million to $734.1 million and parts sales from $950.7 million to $700.1 million.
In total, Brazil’s exports to Argentina have fallen 37.6% year-on-year to $5.9 billion.
Despite this, Brazil’s trade outlook remains strong, with exports rising to $167.61 billion and imports up to $125.3 billion from fiscal stimuli.
Brazil anticipates a robust trade surplus between $75 billion and $85 billion, below last year’s $98.8 billion.
This resilience and evolving trade dynamics reflect shifts in regional and global economies.
Background
However, despite challenges under President Javier Milei’s administration, Argentina’s economy showed its first sign of improvement in May.
The country’s economy has finally broken a six-month streak of contraction, posting a 2.3% growth compared to the previous year.
This data, released by the National Institute of Statistics and Censuses (Indec), marks a significant turning point for the South American country.
Additionally, Argentina saw a 1.3% rise from April, the first month-to-month improvement since September 2023. Despite this positive development, economic activity over the first five months of 2024 still fell by 2.9%.
The agricultural sector played a crucial role in this recovery, boasting a staggering 103.3% year-over-year increase.
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