By Jamil Chade (via Estadao).
Brazil moves to register its worst year of trade with Europe in a decade. Official data shows that the trade surplus with the EU has never been weaker since 2002.
First, the European crisis curbed local consumption hence reducing imports. Second, the overvalued Real and the lack of competitiveness of the Brazilian industry ended up weighing in the final bill. As a matter of fact, counting only trade with Portugal, the fall in sales is 30%, the largest decline in at least 23 years.
In 2011, the trade balance with Europe registered a US$6.5 billion surplus. But up to August this year, the scenario was quite different. Brazilian exports to Europe fell 7.3% while European imports in Brazil increased by more than 4%, resulting in an overall surplus of just US$1.1 billion.
It is expected that by the end of the year the surplus will reach US$2 billion, but even so, the volume is equivalent to trade in 2002, when the surplus was a mere US$2.1 billion. To put this ins perspective, in 2007, before the crisis, Brazilian exports to EU registered a surplus of US$13 billion.
Not even in 2009, at the peak of the crisis, trade was so dismal. Back then, the surplus was US$4.8 billion.
But what worries the government the most is that sales to EU’s largest markets have been in a decline trend. Exports to Italy fell almost 10%, while exports to France are down 9%. With Germany, the fall in exports is even greater. Compared to the period of Jan-Aug 2011, this year’s sales drop was 21%. Commodity exports alone to Germany dropped 23%.
The most concerning of all this is the fact that, in recent years, trade with Europe was one of the pillars that allowed Brazil to maintain its trade surplus. With the economies of the G-8, Brazil will complete his fifth year trade deficit. Until August, the hole reached $ 10 billion to these countries.