Export prices reach an historic high

Foto Aldo Abram
Aldo Abram

MERCADOAccording to the latest official data, the price of exports is at a record high, being 50.9% higher than in 2015. This price level is 23.7% higher than that registered during the Commodities Boom of 2011-2015. The Export Price Index and Argentine Imports measures the evolution of the prices of the goods that Argentina sells and buys from abroad, weighted according to the volumes traded. In this way, it allows an evaluation of the evolution of the prices that the country faces in international markets.

Imports increased, but are still below the values ​​of previous years.

On the other hand, we can observe that, although imports increased, their quantity is 10.0% below the levels reached in 2011 and 2017. This reflects the recovery that took place in the level of economic activity after the 2020 recession as the economy returns to its previous output peaks. In the opinion of the director of the Foundation, Aldo Abram, “It is remarkable that the government speaks of a shortage of dollars when we have had international prices that have made the price of our exports exceed those of the last 10 years. If we add to this that there was a flood, both in the region and in the world, of foreign currency because the central banks issued a lot due to the pandemic, it is clear that the problem is not outside but inside. It is a terrible management of the government that is encouraging the flight of savings and investments of Argentines and foreigners, something that will worsen with international winds that begin to be adverse.

On the other hand, Abram added that “the other problem is that the Central Bank sets an artificially low maximum price for the dollar that ensures it scarcity, just like when it is done with oil, demand increases and supply decreases. Therefore, it is doing the same thing as supermarkets so that they do not run out of what they have on the shelves and restrict sales to one per customer. The BCRA left a large part of the demand of people and companies out of the official market and by restricting the stocks more and more it manages to moderate the loss of reserves. This trend should be deepened in the future, which will have tremendous costs for the economy and the well-being of Argentines.”

Eugenio Marí, Chief Economist of the Fundación Libertad y Progreso says that “Argentina is wasting an enormous opportunity. Today’s terms of trade are even higher than those we saw we were talking about growth at Chinese rates. Not having an orderly macroeconomy, having protectionist policies and permanently hitting investment and production costs us dearly”.

In addition, Marí asserted that “to make matters worse, once again imports have become the scapegoat for our problems. In itself, the current volume of current imports is not very different from that registered in 2017-2018, nor from that of the 2011-2013 period. But people tend to forget that imports play a fundamental role in sustaining the production of companies and increasing competition in Argentine markets. To give a number, 80% of imports correspond to capital goods, their parts and intermediate goods; that is, inputs that are used directly in the production processes”.

Diego Piccardo, an economist at the Fundación Libertad y Progreso, points out that “the discourse carried out with Kirchnerism against imports is the prelude to a new adjustment of the exchange rate. Given that accumulation of dollars in the first half, with record exports, was tantamount to zero, the BCRA has few options to accumulate reserves in the second half when exports fall seasonally and dollar receipts are reduced.”

One of the options is to devalue the exchange rate so goods and services from abroad more expensive and ours cheaper. The second option, and the most likely, is to restrict imports even more, paying a cost in terms of activity, but avoiding the inflationary flash that the devaluation of the official exchange rate would bring.”