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ECONOMY | 20-07-2023 13:58

Argentina's trade gap hits record as drought foreshadows recession

Argentina's worst drought in history led to a record trade deficit in June, raising recession fears as the economy faces a 3% contraction in 2023.

Argentina posted its worst monthly trade deficit on record in June, underscoring the impact of a record drought that’s driving the economy into a recession. 

South America’s second-largest economy recorded a US$1.7-billion trade deficit in June, the largest negative figure in monthly data going back to 1967, according to government data published Wednesday. Exports were down 35 percent from a year ago, with losses led by agriculture products, while imports fell by 17 percent.

Argentina’s worst drought in its history cost the economy US$20 billion of commodity exports by government estimates, while Economy Minister Sergio Massa hasn’t cut back as much on imports to keep other industries going. That dynamic is ballooning the trade deficit, exacerbating Argentina’s shortage of dollars that’s putting pressure on the peso and inflation running over 115 percent. 

Economists surveyed by the central bank estimate the economy will enter recession by the end of the third quarter this year, contracting about three percent for all of 2023.  

by Patrick Gillespie, Bloomberg

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