Foreign Trade Indicator: China and agriculture sustain Brazilian exports, while imports fall in recession
In June, Brazil recorded an all-time high trade surplus of US$7.5 billion. This result is explained by a sharp fall in imports (19.8% between June 2019 and June 2020) rather than an improvement in exports, which fell 2.7%. In the first half of this year, the surplus was US$22.3 billion, the lowest since 2016.
However, indicators produced by Fundação Getulio Vargas’ Brazilian Institute of Economics (FGV IBRE) show a different picture for exports, which grew 13.1% in volume terms, year-over-year, in June. What depressed export values was the 14.0% reduction in prices. Meanwhile, import volumes fell 14.2% and import prices fell 6.5%, leading to the aforementioned slump in the value of imports.
Operations involving oil platforms, especially imports in May (see FGV’s monthly Foreign Trade Indicator for June), led to differing results for the first half of this year. Including oil platforms, Brazil’s exports increased 0.1% and imports increased 1.0% in relation to the first half of 2019. In this case, foreign trade had a negative contribution to GDP. However, when oil platforms are excluded, exports rose 1.3% and imports fell 3.2%, resulting in a positive contribution to GDP. The latter result is more consistent with the country’s present recession and growth in commodity exports, as we will see below.
Between June 2019 and June 2020, commodities accounted for 70% of Brazil’s exports and they expanded 10.5%, while non-commodity exports fell 24%. The strong performance of commodity exports was driven by volumes, which rose 33.9% in the 12 months to June 2020 and 13.4% between the first half of 2019 and the same period of this year. Non-commodity exports have declined over the course of this year in relation to 2019 and 19.8% between June 2019 and June 2020. Commodity imports fell, and also non-commodity imports, if we exclude platforms. In this case, the 1.4% increase becomes a 3.2% decrease when we compare the first half of 2019 and the same period of 2020.
The complete study is available here.
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