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January marked Brazil first trade deficit in eight years

Monday, February 2nd 2009 - 20:00 UTC
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Brazil recorded its first monthly trade deficit in almost eight years in January as exports plunged by a record amount on falling prices for the country's commodities, according to the latest release from the Development, Industry and Trade ministry.

The 518 million US dollars deficit was the first since March 2001 and the largest since November 2000 and compares with a 2.3 billion USD surplus in December. Brazil's exports fell 29% to 9.8 billion USD, the biggest month-over-month drop since 1991, while imports declined to 10.3 billion from 11.5 billion USD in December, the ministry said. "There's a downward trend in Brazilian exports, with lower demand from traditional markets such as the US and Europe" Trade Secretary Welber Barral told reporters on Monday in Brasilia. Brazilian exports to the US fell 36% in January from a year earlier while sales to the European Union dropped 27.4%. Latin America and the Caribbean bought 37.4% less last month, said Barral. Imports from the US rose 10.1% in January from a year earlier to 2.01 billion USD on purchases of medicine, TAM Airlines' acquisition of a Boeing aircraft and shipments of coal. "The developed countries will only begin recovering from a decline in GDP in 2010," Barral said. "Emerging countries will grow a little, and this will continue to shift Brazilian exports to those countries," Barral said. Exports of industrial goods fell 29.4% to 6 billion from 8.9 billion in a year earlier. Daily average automobile sales abroad fell 56% to 170 million from 405 million. Beef exports fell 51.8% and crude oil sales sank 44.7%. The Brazilian Central Bank expects the country's trade surplus to narrow to 14 billion this year from 24.7 billion USD in 2008. Trade surplus have been one of the main pillars of Brazil's fiscal equilibrium and strong growth performance. In 2007, the trade surplus was a record 40 billion USD, but the strong Brazilian currency, Real, helped soar imports and the surplus almost halved to 24 billion last year. In related news the Central Bank weekly poll among leading analysts showed that Brazil is forecasted to grow 1.8%, instead of 2%, from the previous estimate. Similarly the basic interest rate Selic is expected to end 2009 at 10.75%, down from the previous 11%. Consumer inflation is also anticipated will fall to 4.6%, just above the Central Bank target (plus minus two percentage points).

Categories: Economy, Brazil.

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