AEB revises forecast downwards for Brazil’s exports and imports in 2020

Brazil’s exports are forecast to drop 13.9% in 2020 year-on-year, reaching a total of US$192.721 billion.  Imports are expected to fall by 18.1% to US$145.255 billion.  Hence, a trade surplus of US$47.466 billion is predicted, which would be only a 1.7% increment on  2019.

The forecast is from the Foreign Trade Association (AEB), which revised its forecasts for the 2020 trade balance, given the new scenario that Brazil and the world is being subjected to with the Covid-19 pandemic.

According to an assessment by the president of AEB, José Augusto de Castro, the new figures reflect the instability of the external scenario, accentuated by the trade war between the USA and China, the USA presidential election, the almost unanimous opinions of a fall in global GDP, and the high and growing unemployment in the world.

“The worsening of the economic crisis in Argentina, the strengthening of the dollar and the weakening of currencies, in addition to internal problems in Brazil, contributed to the retraction of the balance figures”, noted José Augusto de Castro.

AEB’s forecasts also indicate that the trade surplus projected for Brazil in 2020 will be triple negative, as it will be obtained with a drop in exports of 13.3%; imports of 18.1%; and 15.4% in the trade chain, resulting in a reduction in economic activity.  According to the survey, the projected trade flow of US$339.445 billion for 2020 will be less than the US$401.333 billion recorded in 2019 – and even further from the record of US$482.292 billion obtained in 2011.

“Excluding the year 2018, since 2014 Brazilian exports of manufactured goods are stagnating at a level below US$80 billion. The  US$56.295 billion projected for 2020 will be close to export levels of 2004, especially after the crisis that plagues Argentina and South America “, said the president of the AEB.

Also according to the AEB, this year the economic crisis displaced Argentina from the position of second largest importer of Brazilian manufactured goods, pushing it to the fourth position. “Exports to Argentina are falling sharply and representing only 3.6%, when in the recent past they reached a level above 10%”, observes the executive.

Commodities

Despite strong price fluctuations, the volume of the three main products in the export basket – soy, oil and iron ore – will increase their share to 34%. These items are benefiting from the decline in manufactured goods, consolidating the weight of commodities in exports and in trade surplus.

Soybeans, for the sixth consecutive year, will be Brazil’s main export product, with iron ore returning to second position and oil in third, by a small difference. By the third week of July, 66.5 million tonnes of soybeans had been shipped, representing 85% of the 78.5 million tonnes scheduled for shipment in 2020.

The projected export and import data for 2020 also indicate that Brazil should occupy the 30th position in the ranking of exports and 31st in imports, with the share in world exports expected to be reduced to around 1%.

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