VZCZCXYZ0003
RR RUEHWEB
DE RUEHBU #0757 1541533
ZNR UUUUU ZZH
R 021533Z JUN 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 1229
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE
UNCLAS BUENOS AIRES 000757
SIPDIS
SENSITIVE
E.O. 12958: N/A
TAGS: ETRD EAGR EPET ECON AR
SUBJECT: High Commodity Prices Boost Argentina's Early 2008 Trade in
Goods
Refs: (A) Buenos Aires 116
(B) Buenos Aires 733
1. (U) Argentine goods exports were up 40% year-on-year in the first
four months of 2008, and imports increased by 45%, according to a
report released by GoA statistics agency INDEC on May 26. Total
exports were USD 21.6 billion, and imports were USD 17.8 billion,
leaving a trade surplus of $3.8 billion - up 18.5% from the surplus
of $3.2 billion in the first four months of 2007. The report
attributed 86% of the increase in exports to higher goods prices,
which were up 32% from 2007 levels, and the remaining 14% to
increased quantity, which increased 5% over 2007 levels.
2. (U) On the export side, the increase was led by primary products,
especially soy and grains. Total value of exports in those areas
(including processed soy) rose from $8.3 billion in January-April
2007 to $12.4 billion in the same period of 2008 - a 50% increase
accounting for 68% of the total value increase of Argentine exports.
Another $1.4 billion was from increased exports of manufactured
goods, primarily automobiles, exports of which rose 61% y-o-y to
$700 million in the four-month period. Fuel and energy exports,
despite a 64% increase in price, only rose 26% in total value to
$2.9 billion thanks to a 23% reduction in quantity exported. The
decline in hydrocarbon export volumes is a function of burgeoning
domestic energy demand and stagnant levels of domestic oil and gas
exploration and development.
3. (U) The largest value increases in imports came in the categories
of intermediate goods, which rose $2.0 billion (or 46%) to $6.4
billion, and in capital goods, which climbed $1.5 billion (51%) to
$4.3 billion. The increase in capital goods imports was split
fairly evenly between Mercosur, NAFTA, and the EU, while nearly half
of the increase in intermediate goods was from Mercosur. Automobile
imports grew the quickest, up 55% to $1.3 billion.
4. (SBU) In a separate report released in late April, INDEC noted
that if goods in the first quarter of 2008 had been exported at 1Q
2007 prices, the trade surplus for the first quarter of 2008 would
have been just $470 million, rather than the actual surplus of $2.9
billion. Global price increases had the largest impact in the
agricultural sector: the price of primary product exports (excluding
petroleum) increased 53%, and prices for processed agricultural
goods prices rose 47%. Import values, on the other hand, were
affected more by increases in quantities, which rose 26% vs. an 11%
price increase.
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Comment
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5. (SBU) The contrast between export price and quantity increases
illustrates the dramatic effect of the current commodity boom on
Argentina. The Kirchners have anchored their economic plan on
Argentina's "twin" primary budget and trade surpluses. Record high
global commodity prices and late 2007 increases in export taxes have
permitted the GoA to maintain both. Argentina's trade surplus in
the first third of the year would have been higher still, if not for
the impact of the agricultural sector strike that began March 13 on
agricultural exports (reftels).
WAYNE