Brazil registered its first annual trade deficit since 2000, according to official data released on Monday. Latin America's largest economy slowed down in 2014 and prices fell for iron ore, soybeans and other key commodities exports.
The country's trade deficit for 2014 was 3.93 billion dollars, the biggest gap since 1998, the Trade Ministry said. The deficit is a serious challenge for President Dilma Rousseff and her new economic team as she starts her second term.
A deteriorating trade balance over the course of 2014 helped weaken the local currency, the Brazilian Real, as fewer U.S. dollars entered the economy. The weaker Real could lead to additional inflation pressure as imports become more costly in local currency terms.
The country managed a 293 million dollars surplus in December and posted a deficit of 2.35 billion in November. In 2013, the trade surplus was 2.38 billion, its smallest surplus in nearly a decade.
Exports were 225 billion in 2014, down 7% from 2013. Imports were 229 billion for the year, a 4.4% decline from the previous year. The value of manufactured goods exported in 2014 fell nearly 14% from 2013.
Brazil is the most closed major economy in the Americas according to International Monetary Fund data. A move towards freer trade may be part of a more market-friendly turn from Rousseff as the economy teeters on the edge of recession.
A trade agreement between the Mercosur and the European Union has been in the works for nearly two decades.
As recently as 2011, Brazil posted a surplus of $29.8 billion, or the equivalent of 1.2 percent of gross domestic product.
China remained the top destination for Brazil's exports in 2014, followed by the United States and Argentina. However exports to Argentina fell by 27.2% as Brazil's neighbor also run into economic and financial trouble.