Brazil’s Economy Ministry on Monday raised its projection for the country’s trade surplus this year to US$56.7 billion from US$50 billion but warned that trade activity will decline due to slowing global economic growth.
While the Economy Ministry’s new forecast is up some 13.4% from its the original projection, it would still be smaller than last year’s US$ 58.03 billion surplus, meaning trade is still on course to be a net drag on Brazilian economic growth this year.
Speaking to reporters in Brasilia after the release of June trade data, Economy Ministry officials said exports would likely fall 2.0% this year compared with 2018 and imports by 1.9%.
“Global growth this year is expected to be lower than last year, and obviously, we will suffer as a result,” said Lucas Ferraz, secretary of foreign trade at the ministry.
Ferraz and other ministry officials also spoke about the free trade treaty agreed by the European Union and South American bloc Mercosur last week after 20 years of negotiations, and the potential benefits it will bring to Brazilian trade.
Ferraz said the landmark deal, which is not expected to come into force for at least three years, will increase total exports and imports by around 1 trillion reais (US$ 261 billion) and spur 453 billion reais of investment over 15 years.
The size of Brazil’s gross domestic product over the same 15 years period will grow by up to 500 billion reais, Ferraz estimated.
Marcos Troyjo, special secretary for trade and international relations at the ministry, said the accord was a model change for the bloc, which consists of Brazil, Argentina, Uruguay and Paraguay, and offers Brazil an opportunity to increase its relatively small footprint in global trade.