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Brazil faces $2.8 billion trade deficit in February, $3.2 billion in January

Brazil faces $2.8 billion trade deficit in February, $3.2 billion in January

SAO PAULO:  Brazil posted a trade deficit of $2.8bn in February, lower than the deficit of $3.2 billion in January but higher than the deficit of $2.1 billion in February 2014.

The 12-month trade balance went from a deficit of $3.0 billion in January to a deficit of $3.7 billion in February.

Exports fell to $12.1 billion in February compared with $13.7 billion in January. The daily average of exports dropped -15.7% year-on-year (yoy) in February, compared to a -10.4% yoy decrease in January.

Exports posted a slower contraction in manufactured products, from -14.6% yoy in January to -11.1% yoy in February. However, semi-manufactured and basic products accelerated their deceleration, from +3.1% yoy in January to -2.3% yoy in February and from -11.1% yoy to -22.7%, respectively. The result was driven by:

The highlights were the decline in the daily average of shipments of soybeans, of -72.2% yoy in the month compared with -6.6% yoy in January, and of iron ore, of -35.7% in February compared with -49.5% yoy in December.

Semi-manufactured goods: The highlight was the decrease in exports of crude sugar, of -44.6% yoy in February compared with a -12.8% yoy decrease in January.

Decline in exports of auto parts of -12.2% in February, compared with a decline of -21.6% yoy in January.

Imports declined to $14.9 billion in February compared with $16.9 billion in January. The decline in the daily average of imports was -8.1% yoy in February, compared with ‑12.0% yoy in January. The highlights were the reduction in imports of fuels and lubricants (of -20.3% in February, versus from -28.2% in January) and in durable goods (of -14.9% in February, versus -21.5% in January.

For imports by origin, February posted a decline of ‑21.9% yoy in imports from the USA, compared with a decrease of -9.3% yoy in January. Imports from Latin America and Caribbean decreased -14.6% yoy, compared with a contraction of -4.2% yoy in January.

“The much lower prices of commodities in international markets (e.g., iron ore and soybeans) explain the bulk of this movement, which implies that exports of basic products should remain weaker than in 2014 for the remainder of the year. The month’s figure was also affected by a strong decline in the volume of soybean exports, as 2014 saw an earlier-than-average harvest season. At the same time, manufactured goods also contributed to the decline in exports in the month, probably reflecting the lower absorption of Brazilian products by other Latin American countries.

As expected, imports also posted a year-on-year decline in February, partially offsetting the weak exports in the month. The decline was across the board, reflecting the sluggish growth of the domestic economy, the depreciation of the BRL, and the decline in oil prices in international markets,” reports Credit Suisse’s Leonardo Fonseca. “The more positive seasonality and the amplification of the effects of the sluggish growth and of the BRL depreciation should contribute to a reversal of the trade deficit in the coming months.”