Soaring imports test Argentina's trade balance

March 2, 2011 at 6:13 PM
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BUENOS AIRES, March 2 (UPI) -- Soaring imports are putting Argentina's economy under severe strains, raising renewed alarm over the economic and financial impact of the country's buying spree.

Imports are an emotional subject in Argentine politics, as easier import terms for foreign goods are seen as a sop to the middle-income consumers, regarded by President Cristina Fernandez de Kirchner as a key constituency.

The president has had rows with farmers, dockworkers and other employees of state and private sector enterprises. The middle classes are seen as influential in the media's representation of the president's style of government and Fernandez plans to seek re-election in the Oct. 23 presidential election.

Trade figures for 2010 and January shocked both government supporters and critics. The January figures indicated that Argentina's trade surplus was melting away fast.

The trade surplus figure for January was 58 percent lower than the surplus recorded in the comparable period in 2010, the National Institute of Census and Statistics said.

Exports rose 22 percent when compared with the period a year earlier and reached $5.4 billion in January. However, in the same period, imports soared by 52 percent to $4.9 billion.

Nearly one-third of Argentina's exports went to Latin American countries that are members of the Mercosur regional trade bloc. At the same time, however, a similar proportion of Argentine imports originated from Mercosur countries.

Argentina was accused earlier of trade practices that ran counter to the spirit of Mercosur as a regional group aspiring to become a common market. Argentine trade policies have also pitted the country against the European Union in trade disputes before the scheduled resumption of talks on an EU-Mercosur trade accord.

Economists are troubled by the growing trade imbalance. Argentine exports rose 23 percent to $68.5 billion last year but imports during the same period recorded a 46 percent increase, pushing the import bill to $56.44 billion. Imports of capital goods and automobiles contributed to the increase.

The government's response has been to raise the trade barriers and increase from 400 to 600 the number of goods that now require a non-automatic license. Despite a continuing row with China, a series of anti-dumping duties on a range of Chinese-made air conditioners also remain in place.

Amid preparations for the next round of EU-Mercosur trade negotiations, the new trade barriers renewed tensions with Mercosur partners Brazil and Uruguay.

Fernandez said she looked forward to a further rise in Argentina's gross domestic product, after a stated 9.1 percent growth in 2010. Officials said they expect more moderate growth in 2011.

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