they foresee a hard blow to Argentine exports

Just in a year in which the Government needed dollars (and in large amounts) and that it was looking to bet on the recovery of economic activity, the coronavirus disrupted all plans.

At a time when airlines are forced to leave their planes on the ground, sporting and business events are suspended in every city in the world, and “quarantine” becomes an increasingly used word, the world economy will not emerge unscathed.

Organizations such as the OECD or the IMF have already cut global GDP growth projections in half, the same that had been disclosed just two months ago.

And, in the case of Argentina, the pandemic will have no minor consequences. Consultants like Ecolatina sharpened the pencil and have just cut the prospects for the pace of activity: They went from a 1.5% contraction for this 2020 to a 2% contraction, “with downside risk if the restrictions are deepened“they clarify.

In addition to the recessionary effect that the cancellation of events and the fall in tourism are having on the domestic market, the Rosario Stock Exchange warns that one of the most serious “transmission routes” than the coronavirus effect on the Argentine economy will be due to the export side.

“The impact in this way can be notable“, they warn from the entity.

“The dynamics of foreign trade is suffering. A significant part of production is destined for China, the United States and Europe, which account for around 30% of our exports. And the demand shock these countries are having will definitely affect the volume of our sales “, raise from Ecolatina.

Coronavirus “infects” agriculture

In this context, beef cutting dispatches, one of the star products during 2019, with a record currency record, is among the most punished. Basically because China had been acquiring 70% of the shipments, with purchases of more than US $ 2 billion during the past year.

“We still do not have an estimate of how much demand will deteriorate throughout the year. But we do know that in the first two-month period we suffered a 25% drop in shipments to China,” warn from the Chamber of the Meat Industry ( CICCRA).

From the BCR they add two other products from agribusiness: pork, which although it is not a sector that appears among the large foreign exchange generators, does depend a lot on the Asian giant, which had been absorbing about 25% of shipments from Argentina . And, on the other hand and fundamental, the soy bean, an annual business of US $ 3 billion for the country and that China motorized by 90%.

“With the harvest already entering definitional stages, the impact at the productive level will be less, but there will be an effect in terms of foreign exchange and profitability of the agricultural sector,” warned Abeceb, a consultant.

It happens that the deterioration of the world economy, added to the collapse of the oil price, is strongly affecting the prices of grains. And this is terrible news for Argentina.

The May position for the oilseed suffered a sharp drop of almost 5% for close the week at a level of $ s314 per ton, the worst record in almost a semester. Another fact not less: in 2012, in times when Cristina Kirchner ruled, the oilseed reached the record of US $ 650 per ton. In other words, in eight years it lost more than 50% of that value.

In addition to the fall in commodity prices, another factor that causes concern among agricultural entrepreneurs is added: the deterioration of weather conditions.

The BCR is already putting a figure on that scourge that, far from being a theoretical matter, will translate into fewer tons to export.

In a report they warned that “The possibility of reaching 55 million tons as estimated in February was left behind.”

An increase in temperatures, soils that in key areas ran out of water reserves and the loss of more than half a million hectares, added to the low yields, now suggest a soybean production of 51.5 million tons, 3.5 million less than the previous projection.

There will also be impacts on regional economies. And wine is one of the products that could be most affected. The consultant Javier Merino, director of the Wine Area, warns that every time the economy slowed down, the wine also suffered, in a kind of “mirror movement”.

According to a report by the Wines Division of Banco Supervielle, prepared by Merino, “the world GDP explains more than 98% of the wine trade”.

“There is a very strong correlate: in the last 30 years, world GDP and global wine trade have moved together. One curve traced the other,” he says. So the bad prospects for the economy predict a slowdown in external demand for the sector, right in 2020 when they intended to grow again after years of rigging.

“The wineries, with a domestic market down, had a foreign exchange window that generated a good opportunity for them in foreign markets. It implied an important respite. The question to ask now is to what extent the fall in the economy and demand global is going to close that window of opportunity, “warns Merino.

Coronavirus effect: less dollars

From Ecolatina they make a diagnosis that is very worrying: they argue that the entry of commercial currency will suffer in a context of shortage of reserves. And while they clarify that imports will also be affected by (less domestic activity and lower international prices, “The effect would not offset the decline in exports.”

There are already some papers that a renowned consultancy sent to one of the most representative chambers of the foreign trade sector, in which they warn that a prolongation of the pandemic could translate into a drop of between 7% and 10% of exports. nationals. If this is combined with lower prices, this would mean a decline in foreign exchange earnings of more than $ 6 billion compared to 2019.

At the same time, the Rosario Stock Exchange also warns that there is “a specific risk of an erosion of foreign trade and, consequently, of foreign exchange earnings from exports for this year.”

“This, on the one hand, puts pressure on the exchange rate, especially in a context where while the local currency lost 4% of its value in relation to the dollar since January 1, the Brazilian real depreciated 18% in the same period, harming Argentine competitiveness in relation to our main trading partner, “they note.

In this context, Ecolatina warns that the lower inflow of dollars could put the economic team in a dilemma: “Either it imposes quantitative restrictions on imports in order to preserve the trade surplus to meet its financial commitments, or it agrees to partially lose it and not resent the level of activity as much. “

Prior to this scenario, the Government, through the Ministry of Productive Development, had already begun to lay the foundations for an import monitoring program, requesting visible information and leaving the door open for further controls, although it should not yet have thrown out hand to them because the crisis itself prevents the demand for goods from abroad to grow.

In any case, Ecolatina analysts pose as a very likely scenario that a mix will be sanded, which It would not be positive either, since “it will affect both debt negotiation and local economic activity.”

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