Lower exports to Argentina help to increase trade deficit

A decline in sales of manufactured goods to Argentina is among the main reasons behind the $939 million deficit in Brazil's balance of trade in September. This has been the worst result recorded for the month since 1998, when the net exports plunged to a negative $1.2 billion. In the January-September period, the deficit is $690 million. The month result also reflects the impact of declines in price and volume of shipped commodities.

According to Roberto Dantas, director of the Department for Exports and Statistics of the Ministry of Development, Industry, and Foreign Trade, Argentina accounts for 77% of the decline in manufactured good exports in 2014, chiefly in the automotive industry. The country used to be the top destination for Brazil's manufactured goods, but lost this status to the United States in recent months – in September alone, Brazil sold $10.9 billion in manufactured goods to the US, compared to $9.8 billion sales to Argentina.

In the commodities sector, there was a decline in the average exports of iron ore (23.8%), soybeans (30.5%), crude oil (18.5%), soybean meal (23.1%), corn kernels (38.9%), and beef (16.1%). In the case of iron ore, price falls were as great as 17.1% this year, whereas corn kernels have seen even sharper declines – 24.5%. Quantities sold have also decreased as a result of greater corn availability in the US.

Commenting on the increase in oil and oil products imports in September, Roberto Dantas said the reason is difficult to trace. “Monthly figures will fluctuate,” he said vaguely. He again emphasized how the oil account deficit has decreased, going from $16.5 billion last year to $12.8 billion this year.

“We can certainly expect [oil] exports to resume growth. [Imports] were quite remarkable this month, but they tend to cool down in the next few months, because the Christmas holidays will mean lower demand [for fuel],” he said. According to him, the holiday season could also lead to similar declines in other imports, combined with lower activity periods as suggested by the GDP decrease.

Finally, Dantas highlighted the fact that the year-to-date deficit was lower than last year's $1.7 billion. According to him, the government still anticipates a surplus by the end of 2014, without explicitly mentioning any figures.

Translated by Mayra Borges