Ecolatina: debt payments will cover the entire trade surplus of 2020

The Trade balance is the only positive indicator for Argentina since the middle of last year When internal consumption has plummeted, investments, public spending, among others, indicate a report from Ecolatina, which illustrates: "While in the first half of 2018, the trade deficit is s & # 39; 39; was aggravated compared to the same period of 2017 (it went from $ 2,600 million to $ 4,900 million), in the second half of last year, the red became a surplus, from $ 5,700 million to $ 1 billion, and this dynamic was repeated in the first part of 2019 and the trade balance totaled $ 5.6 billion.

Ecolatina states, however, that "despite this good news, it should be noted that the improvement mainly responded to a collapse in importswho rubs 30% i.a. in August cumulation (latest data available), and not an advance on exports, it increased by just under 4% i.a. in the first eight months of the year. As a result, the recovery of the external front is more of a by-product of the crisis than the result of greater competitiveness of trade or the opening of new markets. For these two policies to produce concrete results, it will be necessary to keep them in time. "

Ecolatina claims that the improvement in business performance "would be even greater if the Brazilian economy ended up developing – its growth forecasts had gone from 2.5% at the beginning of the year to less than 1% last week – and if our terms of trade, that is to say that the prices of our export products compared to those of import were not down (-17% , for example, in the accumulated August), produced the record harvest that underpinned the international supply of petroleum products and the trade war between the United States and China, which picks up the growth of the Asian giant. "

The report also predicts that, as the recession still does not find its floor, "the improvement in the trade balance will be maintained in the second half of the year, and the commercial surplus of goods would be disappointed. approximately $ 14 billion in 2019. This result could be explained by a significant drop in imports (-22% yoy), which will close 2019 to the tune of 51,000 million USD and a warm advance of external sales (+ 5% y / y) , which would accumulate $ 65,000 million this year, thanks in part to the weak base of comparison that left the drought of 2018 and the largest exportable balances that are producing depressed domestic demand. "

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For 2020, Ecolatina forecasts "a trade surplus of nearly 19 billion US dollars for next year, a historical record measured in current dollars". The consultant warns that, even with all the original conditions, if this balance was not positive, "the defect would be inevitable". "We can not rule out a default scenario with a surplus of 5% of GDP," he says.

Ecolatina's expected record surplus for 2020 is based on a forecast of a drop in imports (estimated at 5% yoy), which would be around US $ 48 billion, and an increase in exports (around US $ 3 billion) . 5% ia), which would reach 67,000 million USD.

"The explanations for this dynamic would be similar to those of 2019: an internal demand in red and a depreciated peso, which would have a negative impact on the domestic situation but generate ecological foci on the external front." Brazilian economy could provide help (its growth forecast is around 2% of ma), which will not happen this year, but the agricultural harvest will not repeat the excellent performance of 2019 and its base of comparison does not will not be low because of the drought of 2018. Similarly, due to the trade war between the United States and China, plus the sluggish growth of the European economy, our terms of trade would not reverse the deterioration of this year, "said Ecolatina.

Ecolatina draws another conclusion by crossing the debt data with the balance in favor of the trade balance. Part, on the one hand, of a forecast of falling 1.5% of GDP (REM) and a relatively stable real exchange rate, without strengthening the peso, and provides that the supravit the external front will be completely devoured for "the high payments of the relevant public debt (to the private sector and international financial organizations) in foreign currencies that our country faces, which are in the order of $ 25 billion, more than 5% of GDP.

"In summary, in 2020, the external front will once again become a lone star in a largely affected Argentine economy.We hope that it will also contribute to the dollars needed to deal with the relevant debt services and become our only hero." in this mess. "

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