The trade balance is not to blame for the dollar deficit

The trade balance is not to blame for the dollar deficit

The problem is not the balance between purchases and sales, but macroeconomic imbalances; Argentina achieves good foreign exchange earnings, but they disappear on the other hand

The dollar deficit is due to factors other than the trade balance
The dollar deficit is due to factors other than the trade balance

It’s a good time We live with a dollar deficit. This is actually happening not in our economy in general, but in the central bank specifically. Because where there is a price, there is an offer. However, in the background of these difficulties, from the administration side of the government The gaze rests on the balance of goods trade surplus. Claim that more dollars come from that balance.

Well, it can be said from a broader perspective There are no relevant reasons for the above-mentioned shortage of foreign currency (or rather, they are elsewhere): these are other flows (balance of services, financial movements, foreign direct investments, income flows and international transfers and other capital movements) that create conditions that put pressure on BCRA’s international reserves. However, it should be noted that it is The centralization of the entry and exit of foreign currency into BCRA, which creates the first condition of this tension.

Working with the annual data for each country in the region provided by ECLAC, we can conclude that In the last three years, the commercial surplus of the balance of goods in Argentina amounted to 57 billion dollars.. And that this This was the second largest surplus in Latin America at the time. Only Brazil has amassed a higher income (almost $110 billion), although Brazil achieves a GDP that is three times that of Argentina.

The other best records in the triennial (accumulated surplus) region are Chile (over US$36 billion), Mexico (over US$32 billion) and Peru (over US$20 billion). So, no one exceeds Argentina (except Brazil) in the absolute total of the last three years – the accumulated surplus of the balance of goods.

What’s more: Argentina’s accumulated surplus in three years accumulates a rate equal to 16% of the accumulated surplus of all Latin America during this period (almost 90,000 million dollars for the region, adding the results of all countries).

therefore Argentina’s trade account cannot be accused of generating insufficient dollars. nor, by the way, Much less because of suffering from excess imports: According to TheGlobalEconomy, imports accounted for only 15.13% of GDP last year, the lowest on record among all Latin American countries in 2021.

In any case, if there is a problem with trade results, it is the deficit in total foreign trade (exports and imports, goods and services): According to the World Bank, our total intended trade will be 33% of GDP in 2021, the lowest figure in Latin America and the Caribbean, except for Cuba.

Then, and beyond that, the problem is not in the balance between purchases and sales.

Another way to verify the above arises from the comparison of the average trade balance of Latin American countries for the last three years (according to the source given) with the GDP of these countries: Argentina gets one of the highest coefficients (average surplus/GDP): 3.71%. This ratio is exceeded only by the result of Uruguay (4.49%) and is practically equal to Chile (3.80%). 2.26% of Brazil; Paraguay’s is 3.43%; that of Peru is 3.04%; All are lower than in Argentina (Bolivia, Ecuador and Paraguay are even lower). It can be added that Colombia has a trade deficit (as does Panama) and that Venezuela shows records showing comfortable surpluses relative to GDP, although many studies do not count these numbers due to the supposed opacity of some indicators.

And, as an additional analysis, it is useful to note that in Latin America the correlation between the average regional trade balance of the last three years and the total GDP of the region is 0.54% (much lower than Argentina, which was 3.71%).

a) yes Many countries with smaller trade surpluses in their goods balances are not subject to the exchange rate pressures experienced by Argentina. (Some even achieve this with deficits of this magnitude). And Argentina has achieved a good commercial income in foreign exchange (the problem, on the contrary, is that these currencies disappear elsewhere).

Arguably, strictly speaking, Argentina gets the best weighted regional result, because in absolute numbers it is only surpassed by Brazil on this balance, but Brazil has a higher GDP, which reduces the relative relevance of its result; And considering the relationship of trade balance to GDP, only Uruguay and Chile improve Argentina’s result, but our economy is larger than that of our neighbors, which qualifies in favor of Argentina’s result.

In fact, the problem is not the goods trade balance, but macroeconomic imbalances and regulatory and political dysfunctions that lead to unpleasant outcomes.

We can live with smaller surpluses and without shocks.

Therefore, it is advisable, before putting pressure on the trade balance, to restore the balances in the general conditions of the economy and in order to achieve the normalization of the system functioning in foreign economic relations. Which, in addition, will increase exports (which should be substantially higher).

Moreover, all this is important this year, when the surplus in the balance of goods is reduced compared to the last three years: in the first half of 2022, the said surplus reached only 3,000 million, which suggests that By 2022, the favorable balance will be half of the previous year.

Source: La Nacion

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