Brazil`s imports in V-shaped recovery but will it last as much of the world faces second Covid-19 wave?

DataLiner data for September released today clearly shows Brazil`s imports in a V-shaped recovery after reaching bottoming out in June. Containerized imports got off to a good start in 2020, growing 15% in January and 13% in February compared to the same months of 2019. This began to fall beginning in March which closed with a slight drop of 1%. Performance bottomed out in June, with a 40% decrease in relation to the same period of 2019. The following months were still falling in relation to the same period of 2019 but show a steady month-by-month recovery.

Brazilian Imports via Container | Jan to Sept 2019-2020 TEU

Source: DataLiner

 

In comparing the January-September periods from 2016 to 2020, Brazilian import volume is practically at the same level now as it was in 2017 and is 12.16% less than in 2019.

Comparison of Brazilian Imports | Jan to Sept 2016-2020 | TEU

Source: DataLiner

 

Exports suffered less, helped by the strong performance of Brazilian agriculture and livestock, and by the strong dollar, which has made Brazilian products more competitive abroad.

Brazilian Exports via Container | Jan to Sept 2019-2020 |TEU

Source: DataLiner

 

Exports have been growing yearly as seen in the comparison of the January-September periods from 2016 to 2020. The first months of 2020 had a volume that was 4.25% higher than in 2019. In comparison with 2016, the growth in volume was almost 11%.

Comparison of Brazilian Exports | Jan to Sep 2016-2020 | TEU

Source: DataLiner

 

Brazilian Imports vs. Exports | Jan to Sept 2020 | TEU

Source: DataLiner

Another positive point is the Brazilian trade balance. “The September trade balance was the largest monthly surplus on record, at US$ 6.2 billion. This record balance in the middle of a pandemic is yet another sign that the economy is recovering and accelerating. Indicators for industrial production, commercial sales, and sectoral confidence are already approaching, and in many cases exceeding, the values ​​verified before the economic shock caused by Covid-19“, says Paulo Skaf, president of Fiesp and Ciesp.

 

The graph below shows the disparity between Brazilian imports and exports via container in the first nine months of the year:

Trade Imbalance Brazil | Jan 2010 to Sep 2020 | TEU

Source: DataLiner (To request a DataLiner demo click here)

 

The sentiment of recovery was reinforced by Economy Minister Paulo Guedes when he commented last week that Brazil’s economic recovery is surprising the world. “We have hit bottom and are rebounding, with job creation growing at a fast pace,” he said.

According to Guedes, the New General Register of Employed and Unemployed (Novo Caged) has already demonstrated a positive balance since the month of July. “We are creating jobs at an increasing pace. We bottomed out in April; we lost jobs three months in a row, but now we have been creating jobs for three months in a row,” he added.

Year-to-date, the balance was negative at 558,597 jobs lost. According to the minister, despite the negative balance, the result was not as bad as the crises of 2015 and 2016.

The minister pointed out that despite the full impact of the new coronavirus pandemic on the economy, formal employment numbers are better this year than in recent years when Brazil was driven into recession. “In April, we lost more than 900,000 jobs. In May, we lost 360,000 jobs. In June, we lost 20,000. Then, in July, we created 140,000 jobs; in August, we created 244,000 jobs and now, in September, we created more than 300,000 jobs”, he said.

“These signs indicate that the worst of the crisis is now behind us. Once again, the Brazilian economy is showing itself to be resilient and dynamic and is pointing to a faster recovery than initially expected. To consolidate the recovery that will result in the generation of jobs and income, it is necessary to approve structural reforms, such as administrative and taxation reforms, and to address the fiscal issue”, adds Skaf.

Despite the good numbers, considerable uncertainty remains due to the global scenario. The second wave of contamination by Covid-19 in Europe and the United States may yet have an impact on Brazil. Ibovespa, for example, abandoned the recovery seen in the first weeks of October and started planning for a negative close to the month amid fears that new lockdowns will affect the recovery of the global economy.

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