Brazil trade surplus slips 20 percent to an eight-year low


Wed, Jan 05, 2011 - Page 10

Brazil’s trade surplus last year slipped nearly 20 percent to its lowest level in eight years as surging imports caught up with record exports, Brazilian trade ministry figures showed on Monday.

The data confirmed Brazil’s troubles with its strengthening currency, the real, which was making foreign goods and machinery cheaper to buy, while undermining the competitiveness of its exported products, such as soya and iron ore.

The real rose 4.6 percent against the US dollar last year, and 32 percent in 2009. Over the past eight years, it has more than doubled in value against the greenback in tandem with Brazil’s soaring economic prospects.

The trade surplus — the difference between exports and imports — was US$20.3 billion, a figure 19.8 percent lower than for 2009, the ministry said.

Brazil exported a record US$201.9 billion worth of goods last year, higher by 32 percent compared with 2009 — but imports jumped 42 percent to US$181.6 billion.

“All that is supporting Brazilian trade is commodity exports,” Trade Agency of Brazil head Jose Augusto de Castro said.

The proportion of exports of manufactured goods, in contrast, declined.

Although definitive yearly numbers determining the main importers of Brazilian products were not yet available, figures from November suggested that China remained the top customer, followed by the US and then Argentina.

That made Brazil largely dependent on China’s boom, which was showing worrying signs of instability of late, notably in terms of inflation, possible speculative bubbles and declining manufacturing activity.

In 2009, as Brazil was feeling the worst of the global financial crisis, exports fell 23 percent and imports 26 percent compared with the previous year.

The ministry’s new data showed exports had rebounded to pre-crisis levels, but that imports were growing even faster, narrowing the trade balance.

Brazilian President Dilma Rousseff has vowed to take measures to maintain Brazil’s economic ascension, but her goal of lowering the country’s key interest rate from 10.75 percent was made difficult by inflation rising toward 6 percent, higher than the government’s target of 4.5 percent, which asked for a rate hike.

Another increase in interest rates would push the real up further, making imports even cheaper for Brazilians, exports more expensive for foreign buyers and eroding the trade surplus.

Brazil’s government calculates exports should grow another 10 percent this year to US$220 billion.

If the real keeps its current value and commodity prices do not change, Brazil could finish this year with a trade surplus of US$16 billion.