Brazil's 2010 Trade Surplus Lowest in 8 Years

Part of problem is strengthening currency making foreign goods and machinery cheaper to buy

Brazil's 2010 trade surplus slipped nearly 20% to its lowest level in eight years as surging imports caught up to record exports, industry and trade ministry figures released on Jan. 3 showed.

The data confirmed Brazil's troubles with a strengthening currency, the real, which was making foreign goods and machinery cheaper to buy while undermining the competitive prices of its exported products.

The trade surplus was $20.3 billion, a figure 19.8% lower than for 2009.

Brazil exported a record $201.9 billion worth of goods in 2010, higher by 32% compared to 2009 -- but imports jumped 42% to $181.6 billion.

In 2009, as Brazil was feeling the worst of the global financial crisis, exports fell 23% and imports 26% compared to the previous year.

The ministry's new data showed exports had rebounded to pre-crisis levels, but that imports were growing even faster.

New President Dilma Rousseff, who was sworn in on the weekend to succeed Luiz Inacio Lula da Silva, has vowed to take measures to maintain Brazil's economic ascension of the past decade. But her goal of lowering the country's key interest rate from 10.75% was made difficult by inflation rising towards 6%, much higher than the government's target of 4.5%, which argued for a rate hike.

Another increase in the interest rate would push the real up further, making imports even cheaper for Brazilians, exports more expensive for foreign buyers, and eroding the trade surplus.

Copyright Agence France-Presse, 2011

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