MercoPress. South Atlantic News Agency

Brazil posts smallest annual trade surplus since 2002; sales to Argentina drop 20.7%

Soy beans and iron ore remain Brazil’s main export items

Brazil posted its smallest annual trade surplus in a decade last year as a sluggish global economy curbed demand for its products despite government efforts to boost exports. Brazil's trade surplus fell 35% to 19.44 billion dollars from the prior year, the weakest performance since 2002, Trade Ministry data showed on Wednesday.

Subdued demand for products such as soy and iron ore has dragged down exports while demand for foreign products remains robust in Brazil, Latin America's largest economy. Particularly significant was the drop of exports to Mercosur partner Argentina, 20.7%, which is the lowest level since 2009.

Measures adopted by President Dilma Rousseff's government to help exporters have so far failed to raise sales abroad. Officials have repeatedly intervened in foreign exchange markets to weaken Brazil's currency, the real, in a bid to help cheapen costs for exporters.

Brazil's exports fell 5.3% to 242.58 billion dollars in 2012, and imports dropped 1.4% to 223.14 billion.

A sustained drop in exports this year could curtail government efforts to revive an economy that has struggled to grow over the last year and a half. A decade of high commodity prices helped Brazil become one of the world's most dynamic economies with growth rates of more than 4% a year. But last year, Brazil, a major exporter of beef and iron ore, likely grew less than 1%.

Brazil's trade balance improved in December to a surplus of 2.25 billion after an unexpected trade deficit of 186 million in November.

A pick-up in the economies of the United States and China would likely keep Brazilian exports stable this year, the foreign trade secretary, Tatiana Prazeres, told reporters in Brasilia. However, she warned that a recession in the European Union and weak sales to key trade partner Argentina remain a risk for Brazilian exports.

Brazil's exports to Argentina, its third largest trade partner after China and the United States and the top market for its manufactured goods, fell 20.7% in 2012 to 17.9 billion, the lowest level since 2009.

Excluded from international credit markets since its 2002 default, Argentina adopted import restrictions last year to curb the outflow of dollars. Its protectionist action slashed its trade deficit with Brazil by 73.2% in 2012, and also angered the Brazilian government and exporters who cried foul play.

In another trade quarrel, Brazil has threatened World Trade Organization action against a handful of countries that have banned imports of its beef after a case of mad cow disease.

Brazil itself has been harshly criticized by some countries for raising tariffs on dozens of imports ranging from cars to iron pipes and bus tires to protect its local industry. Brazil has said the temporary hikes are allowed under WTO rules