Report: 2018 could be a new historical record of the trade deficit

By , in Science on .

In 2017, the trade deficit was the worst in the last 23 years, reaching the record of US $ 8,472 million. In the first two months of 2018, the improvement in exports was insufficient compared to the increase in imports, which meant an accumulated trade deficit growth of almost 600%, reaching US $ 1,872 million, which already represents 22% of the deficit of 2017.

These data were revealed in the Monthly Economic Report of the month of April 2018, prepared by the Economics Department of the IAE Business School of the Austral University, by Eduardo Luis Fracchia.

Highlights of the report:

– The 2017 trade deficit was the worst of the last 23 years, reaching the record of US $ 8,472 million.

– While exports grew only 0.9%, imports increased 19.7%.

– So far in 2018 there has been a persistence in the trend towards a greater trade deficit.

– Despite the reaction of exports (they grew 11% and 10% in January and February), the growth of imports continues to accelerate.

– In the first 2 months of the year, the improvement in exports was insufficient compared to the increase in imports, which meant an accumulated trade deficit growth of almost 600%, reaching US $ 1,872 million.

– Imports have been growing at a very important rate since March of last year (24% year-on-year, on average).

– A large part of the national industry was not used to compete against imported products and the elimination of import restrictions was implemented in a context of exchange rate appreciation and low productivity.

– Faced with this situation, many national companies faced a complicated scenario due to the impossibility of competing via prices (the most relevant factor in this context).

– In the short term, the government is not expected to adopt policy measures that could partially reverse this trend, such as improving competitiveness via prices (depreciation of the real exchange rate) and / or tariff measures in favor of the most vulnerable sectors.

– In the medium and long term, promoting trade opening in a sustainable way will only be possible by improving competitiveness based on productivity growth thanks to greater investment.