Brazil has posted its highest ever trade surplus with Argentina – US$8.19 billion, which singlehandedly accounts for around 90 percent of the latter’s overall 2017 trade deficit, which could hit 11 digits this year.
These trade figures, dating from last year, are in inverse proportion to the economic performance in the two countries – Argentina’s growth rate last year approximately trebled that of Brazil, thus making for a superior capacity to import. Purchases from the giant neighbour doubled those of a recessive 2016. Argentine exports to Brazil last month failed to reach even half of the purchases from its main Mercosur partner, totalling US$748 million as against imports of US$1.57 billion. Imports from Brazil thus totalled US$17.62 billion last year, rising by 31.4 percent, while trade in the reverse direction shrank by 18.3 percent. Argentina thus accounts for barely 6.3 percent of the total Brazilian import market (down from 12.2 percent at the start of the century). With a huge trade surplus of just over US$67 billion, Brazil posted a new record for the second year running, topping 2016’s figures by around 40 percent, although no hat-trick is expected this year with imports rising in the wake of a recovery forecast to reach three percent this year (which should serve to improve Argentina’s export performance).
But the Brazilian government is still counting on a robust 2018 surplus of around US$50 billion. Along with soy and iron ore sales to China, car exports to Argentina (absorbing 70 percent of the total worldwide) were identified as a key component of the surplus.
Brazilian Industry and Foreign Trade Minister Marcos Pereira highlighted last week that the 2017 trade figures included rising exports for the first time in five years – previous surpluses had been on the back of shrinking imports as Brazil experienced negative growth of over three percent in both 2015 and 2016. The latter also rose for the first time in three years but increased imports did not stand in the way of the record surplus. Last year’s Brazilian exports totalled US$ 217.7 billion (up 18.5 percent) and imports US$150.7 billion (up 10.5 percent).
Brazil’s economy is projected to grow two percent this year, according to an annual report by the United Nations-backed Economic Commission for Latin America and the Caribbean (CEPAL) released last month. That is unspectacular but solid – and far better than the 0.2 percent expected for 2017, or the two years of its worst-ever recession preceding that. The government’s own projections are slightly more optimistic: three percent in 2018 and 1.1 percent in 2017.