Brazil’s Trade Balance Closes January with First Deficit Since 2015

RIO DE JANEIRO, BRAZIL – The drop in the price of several international products and the reduction in the shipment of a number of items led the trade balance (the difference between exports and imports) to close January with its first deficit in five years. Last month, the country’s imports totaled R$3.428 billion more than its exports. This is the worst result for the month since 2015 (-US$ 3.875 billion).

Last month, exports dropped 20.2 percent by the daily average, reaching US$14.430 billion. Imports closed out January at US$16.175 billion, down 1.3 percent from the daily average.

According to the Foreign Trade Secretariat of the Ministry of Economy, the main factor behind the retraction in foreign sales was the export of a US$1.3 billion oil platform in January last year, which was not repeated this year. The balance was then influenced by the drop in international prices and in the volume of crude oil exports, which fell US$592 million in January compared to the same month last year.

Pulp sales fell US$445 million in the same comparison, influenced by the slowdown in the Chinese economy. Another factor that contributed to the drop in exports was a US$270 million reduction in corn sales and a US$255 million reduction in soybean shipments, also brought about by low Chinese demand, which was reflected in international prices.

The growth in exports of iron ore and its concentrates (+US$314 million), cotton (+US$ 282 million) and oil derivatives (+US$ 207 million) failed to offset the drop in shipments of other products. Exports of frozen beef, the main product behind the rebound in inflation at the end of last year, grew US$182 million between January this year and January 2019.

All product categories recorded a decline in exports. Sales of manufactured goods dropped 27.7 percent in January compared to the same month last year, still influenced by the crisis in Argentina. Sales of semi-manufactured products fell 25.2 percent. For staple goods, the drop in exports reached 11.9 percent.

In terms of imports, purchases of capital goods – machinery and equipment used in production – rose 6.6 percent in January compared to the same month last year. Intermediate goods purchases dropped 3.4 percent. However, as a result of the economic rebound, purchases of consumer goods rose 6.9 percent. Imports of fuels and lubricants slipped 15.3 percent.

After closing 2019 at US$46.657 billion, the second-largest positive result in history, the market estimates a lower surplus in 2020, driven mainly by the rebound of the Brazilian economy, which revives consumption and imports; trade tensions among developed countries, which reduces global trade; and the coronavirus outbreak in China, the main destination of Brazil’s exports.

According to the Focus bulletin, a weekly survey of financial institutions released by the Central Bank, market analysts forecast a trade surplus of US$37.31 billion this year. The Ministry of Economy has not yet released its estimates for the 2020 trade balance.

Source: Infomoney

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