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Argentina May Foreign Trade Surplus $1 Bln Vs $1.3B Yr-Ago
Dow Jones Newswires
June 25, 2008

By Michael Casey

BUENOS AIRES (Dow Jones)--Argentina's national statistics agency, INDEC, said Wednesday that the country's trade surplus narrowed to $1 billion in May from $1.31 billion a year earlier, as surging imports continued to offset strong export growth.

According to an INDEC statement, exports came in at $6.203 billion in May, up 28% from $4.85 billion a year earlier and compared with $5.811 billion in April. Imports rose 47% on the year to $5.198 billion.

Both figures were higher than those predicted in the Argentine Central Bank's latest poll of economists, which came back with a median prediction for exports of $6.059 billion and imports of $4.946 billion.

The export result will be perused for signs of any impact from farmers' ongoing grains boycott, launched in protest over a hike in soy export taxes.

Notably, while the overall export gain was once again led by the vital agricultural sector, which saw an on-year expansion of 44% in overseas sales, this appeared to be entirely explained by the global rally in commodity prices over that time. Price gains were the explanation for 55% of the annual agricultural export growth in May, INDEC said, while volumes declined by 7%, suggesting that the boycott constrained growth.

Meanwhile, import growth was more forcefully explained by volume expansion of 25%, with prices rising just 18%. This difference reflects both the continued strength of domestic demand and the strong terms of trade benefit that Argentina derives from the global commodity boom.

Imports were again led by intermediate goods, INDEC said, and by fuels and lubricants. Fuel is increasingly imported into Argentina to avert a looming energy crisis, as natural gas shortages have forced Argentine generators to run on fuel oil or diesel.