By Thais Heredia.
The Association of Brazilian Exporters (AEB) has reviewed recently its projections for the country’s trade balance in 2012. By the entity’s accounts, if the economy remains at its current pace, the Brazilian foreign trade surplus may end 2012 down 76% if compared with last year. It would be the worst result since 2001, when Brazil had a surplus of only US$2.6 billion.
In 2011, the surplus between everything we buy and sell abroad was about US$30 billion. This year, by AEB’s accounts, it should be just about US$8 billion. The government still expects a surplus of US$15 billion.
“Our data is realistic, not pessimistic. We did all the math. In today’s scenario, if China worsens, the numbers get worse. If the world gets better, we get better. We are at the mercy of international markets,” said economist José Augusto de Castro, AEB’s president.
Still according to AEB’s math, exports should total US$237 billion, down 7.4% compared to 2011, while imports will reach US$ 229 billion, an increase of 1.2%.
“There is nothing right now that can compensate for this lower forecast. We can not influence the international market. The government may adopt more protectionist measures to create import barriers. But I hope we don’t become Argentina,” Castro said.
The Brazilian trade balance is even more imbalanced if one compares the exports of value-added manufactured products and commodities. But even if Brazil exported more machines than iron ore, it would be difficult to make up for a good final result, because we would lose in price competitiveness, even with the dollar slightly more expensive as it is now.
“The exchange rate only helps when our prices can compete with international prices, which is not the case now. For commodities, the higher dollar has almost no effect since commodity prices are falling. The iron ore, for instance, saw its prices fall by about 25% this year. What has prevented our trade numbers from falling further is our food exports. But if that starts to fall, the numbers will drop further.”
The overall hope for a more consistent recovery of our economy was pushed to 2013. While expectations for the GDP in 2012 are now below 2%, for 2013 it remains at 4%. But it is still too early to know if this will happen and whether it can improve Brazil’s foreign trade.
“Any number I say will be a mere exercise in futurology. There is no condition whatsoever to ensure that we will have a surplus in 2013,” says Castro.