Argentina’s international reserves will drop to $37.5 billion as capital controls erode the country’s trade balance, according to JPMorgan Chase & Co.
JPMorgan’s estimate of a $5.5 billion decline in central bank funds this year assumes that capital controls will prevent a pickup in private-sector outflows. Reserves dropped to $39.8 billion yesterday, below $40 billion for the first time since May 2007.
“Capital controls threaten to exert an adverse toll on expectations of economic performance,” JPMorgan analysts including New York-based Vladimir Werning wrote in an e-mailed research report.
Argentina’s merchandise trade balance will be $9.6 billion this year, according to JPMorgan, down from a previous estimate of $11.6 billion.
JPMorgan cut its 2013 “agro bonus” forecast, the estimated increase in agriculture-related exports, to $4.8 billion from $6.7 billion. It projected soy crop output of 45 million tons, down from a prior estimate of 51.5 million tons. The bank raised its corn output estimate for this year to 25 million tons from 24 million tons.
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