The year 2020 began unfavorably for Brazilian foreign trade. In other words, the volume of Brazilian exports fell 19.3% in February of this year compared to January 2019.
Import volume grew 2.0% in the period. The data comes from the Foreign Trade Indicator (Icomex), released this Thursday, the 20th, by the Getulio Vargas Foundation (FGV).
The January trade balance registered a deficit of US$1.7 billion, after consecutive surpluses in the same month since 2016.
It is premature to make projections based on the results of a single month.
However, new developments in February signal a reduction in the trade balance deficit for 2020, FGV assessed in an official note.
Export Risks
Icomex notes that the agreement between China and the United States is likely to lead to losses in soybean exports, but there is also a risk for meat exports.
Another risk to Brazil's foreign trade performance is the coronavirus epidemic in China, which has reduced growth projections for the Chinese economy.
The coronavirus, along with the effects of the agreement between China and the United States, points to a drop in commodity prices in the coming months, and a decline in the volume imported by China.
Estimates of losses for Brazilian exports are uncertain, as it is not yet known how long it will take to ensure control of the coronavirus epidemic, FGV emphasized.
The Icomex team predicts a possible drop of between 10% and 15% in Brazilian exports to China this year. At the same time, the FGV considers it unlikely that the Argentine economy will contribute to the increase in Brazilian exports in 2020.
Negative Effects
The Argentine effect is not new, but the fact is that it will continue to affect exports of Brazilian manufactured goods.
The construction of a climate of understanding between the two countries, with the visit of the Argentine Minister of Foreign Affairs to Brazil.
However, leading to the possibility of suspending import licensing measures is an important step,” the FGV note highlighted.
In January 2020, Brazil's trade with China registered a deficit of US$1.566 billion, driven by a drop of 8.8% in the value of exports, explained by a drop of 2.5% in volume and 6.4% in prices.
In the case of imports, however, the variation in volume was positive (3.4%), but prices fell by 3.8%.
Trade with the United States was also in deficit, at US$1.5T4.847 million, with a drop of 28.8% in the value of exports, due to a drop of 23.2% in volume and 7.3% in prices.
In the imports, a positive variation in value was recorded (+8.7%), with advances in volume (+8.4%) and prices (+0.4%).
Trade with Argentina posted a small surplus of US$17.8 million in January. Exports fell 0.91 T3T in value, with declines of 0.21 T3T in volume and 0.71 T3T in prices.
Imports fell by 17% in value, with reductions in both volume (-13.6%) and prices (-3.7%).