Brazil's record trade surplus hides major challenges
Thursday, January 19, 2017
Subject
Drivers of Brazil's record trade surplus.
Significance
Brazil’s trade surplus reached an unprecedented 47.7 billion dollars in 2016. Although a significant achievement from the viewpoint of external accounts, this record derived mainly from the continuing recession. Trade flows dropped by one-third from the peak in 2011. This severe trade adjustment reflects the low competitiveness of the Brazilian manufacturing industry and a structural imbalance in terms of export and import baskets that has worsened over time.
Impacts
- Uncertainties regarding both the domestic and international context may imply a slow recovery in trade flows.
- Policy directions in China and the United States will have a significant effect on Brazilian foreign trade.
- The weak competitiveness of Brazil’s manufacturing industry remains a key issue for both economic growth and trade dynamics.