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With the news that the next president of Argentina won’t be known until after the runoff vote on November 19, there’s no shortage of speculation about what impact a victory for either candidate might have on Brazil’s economy. This is because, apart from its geographical proximity and membership in MERCOSUR, the neighboring country is the third main destination for Brazilian exports.
Brazil’s first and second largest trading partners are currently China, which buys more than 30% of Brazilian production, and the United States, which imports more than 10% of national production.
In the first nine months of this year, 5.4% of Brazil’s total exports went to Argentina, for a total of US$13.6 billion. According to economists, some reduction of this volume is possible, depending on the new economic model adopted by the future president.
The dispute will be between Sergio Massa (União pela Pátria) and Javier Miley (Liberdad Avanza). Whoever wins the election will have to find a way out of the country’s worst economic crisis in 30 years.
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O Brazilian Finance Minister Fernando Haddad, said this Monday morning (23) that he was following the elections in a neighboring country “with interest”, but because of MERCOSUR. “I am a supporter of integration, I like to think about a more integrated South America, stronger negotiations with the European Union,” he said.
He informed that negotiations on an agreement with the bloc of European countries are underway. “So (the election) has very significant implications in relation to this issue of integration. It’s not a separate thing, something like everyone takes care of themselves. We have to think about the whole to see the most appropriate way to make the region develop again.”
Business volume
Although Argentina is the third largest buyer, responsible for 5.4% of the country’s total exports, Brazil’s share of sales has declined.
The volume of business between the two countries was already higher, falling by 15% over a decade, according to the MDIC (Ministry of Development, Industry and Foreign Trade), reaching US$18 billion in 2012 and 15.3 billion in 2022. billion US dollars.
“Exports to Argentina are products with higher added value, manufacturing, machinery, unlike the other two largest markets that buy goods. That’s why it’s an important partner,” says economist and lawyer Alessandro Azzoni.
He states that, despite the fact that the crisis in this country is increasing every year, the Brazilian market has not been affected. “Our economic situation is more stable and Argentina is like Brazil in the late 1980s. Poverty has increased significantly, inflation is out of control, now exceeding 130% per year. The peso, the national currency, has been devalued, and the Central Bank has issued more currency to pay the public’s bills, which is an absurd measure,” he assesses.
“This situation has distanced Brazil so much from Argentina that the IMF (International Monetary Fund) made a forecast published a few days ago that by the end of this year Brazil will become the ninth largest economy in the world. presidential elections in Argentina, it should be minimal in the Brazilian economy,” Atzoni adds.
Fabio Giambiaggi, research fellow at FGV-Ibre (Brazilian Institute of Economics, Getulio Vargas Foundation), also says that the presidential election in a neighboring country will not have much impact on Brazil.
“The consequences will be less than 20 years ago because the relationship (between the countries) has decreased over time and Argentina has become a lesser partner because of all the problems it has faced. China used to account for 1% of Brazilian exports, today it buys 30% of everything sold abroad, the whole situation has changed,” he explains.
According to him, diplomatic relations with Brazil may be in jeopardy if Javier Millay (Liberdad Avanza), an ultra-liberal and anti-establishment candidate, is elected. “He has already publicly interrogated President Lula. So there may be some animosity that will add to the sense that MERCOSUR is having difficulty consolidating since it has been almost 40 years since José Sarni (President of Brazil between 1985 and 1990) and Raúl. Alfonsín (President of Argentina, between 1983 and 1989) signed the first agreements on this integration (in 1985),” he concluded.
