Foreign Trade and Imports in the remainder of 2023.
In the midst of an uncertain international outlook, the local economic situation faces challenges that impact this year’s macroeconomic performance. From import restrictions to exchange rate volatility, companies operate in a context of lower activity and availability of foreign currency.
The global situation influences national dynamics, impacting foreign trade, investment, financing and economic performance. As the presidential elections progress, the lack of international reserves and restrictions in the exchange market present limits to economic policy. With inflation exceeding 100% annually and net reserves of less than one month of imports, a challenging year is on the horizon.
Inflation, the loss of reserves and the restriction on currencies are the main macroeconomic inconsistencies that mark the scenario. Despite a 2022 year of growth, economic activity is beginning to show signs of exhaustion, with falls in different sectors. The restriction on imports is the valve that is adjusted according to the availability of dollars.
In summary, 2023 is ending with lower currency supply, rising inflation, exchange rate pressure and considerable financial risks. Rising poverty and rising unemployment are major social challenges. In addition, the drought that affects agricultural production and exports. We will have to see the impact of these variables on foreign trade and the economy in general.
Geopolitics and Global Economy: Impact on Argentina
The global economy faces an end to the year of change and challenges, with the IMF forecasting growth of 2.7%. Although some major economies, such as the US (1%), China (4.4%) and Japan (1.6%), face modest developments, global GDP will exceed $100 trillion for the first time. However, this situation affects Argentina, since its exports face slowing markets.
The planetary inflation rate, which will drop to 6.9% due to monetary efforts, remains a factor to consider. As international trade slows, Argentina faces a reduction in imports from South America (-1%), Europe (-0.7%), Asia (2.2%) and North America (0.8%).
For Argentina, the lower prices of raw materials, which represent two-thirds of its exports, are an additional challenge. Global geopolitics also influence the outlook, with uncertainty in Ukraine and the US Federal Reserve’s potential interest rate hike keeping the dollar strong.
COVID continues to affect China and its consequences could expand. At the same time, geopolitics is altering trade and investment dynamics. In this context, regional integration, as in the case of Argentina with Mercosur, becomes vital.
Argentina in the International Context: Challenges and Opportunities
The situation in Argentina shows structural challenges in its economy, which makes effective adaptation to the global environment difficult. Although the country has resources that international demand values, macroeconomic and political problems prevent a change in agenda. Despite trade surpluses, the lack of policies and constant uncertainty lead to the flight of dollars. The current drought accentuates the drop in exports, further affecting the trade balance.
Lula’s new government in Brazil could contribute to the Argentine trade panorama, with measures such as financing for imports and the use of local currencies in bilateral trade. Despite these perspectives, a profound transformation is needed in public policies. Tax reductions, trade promotion and encouragement of exports are essential for companies to increase their participation in international markets.
The incorporation of Argentina into the BRICS, the recovery of Brazil’s share of imports and greater integration with Mercosur are future objectives. The world brings challenges and opportunities, and the results will depend on the decisions and actions taken.
Source: CIRA (Chamber of Importers of the Argentine Republic)
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