Brazilian Trade Surplus Aims Toward a Stronger Year Amid Challenges

The Brazilian trade balance surplus is expected to reach $77.3 billion this year, according to the average of 12 estimates from consulting firms and financial institutions collected by Valor Data, with projections ranging from $71.4 billion to $93 billion. Last year, Brazil’s trade surplus totaled $74.6 billion, a 25% decrease compared to 2023.

Economists interviewed by Valor expect the trade balance to improve in 2025, driven by a larger agricultural harvest and increased oil production, both of which are expected to boost exports. At the same time, imports are likely to slow as domestic demand weakens. However, significant uncertainties remain in the global landscape, particularly due to concerns over U.S. policies under Donald Trump’s presidency. A sharper-than-expected impact on commodity prices is a key point of concern.

The sharp outflow of dollars from Brazil at the end of 2024 underscored the critical role of a robust trade balance. December saw record dollar outflows, marking a stark contrast to the positive flows observed through November, which were strongly supported by a solid trade account. For the full year, the overall currency flow turned negative, with a deficit of $18 billion—the third-worst nominal result since 1982.

“A robust trade balance was what prevented an even more significant outflow of dollars from Brazil in 2024,” said Iana Ferrão, an economist at BTG Pactual. “If the trade balance had returned to pre-pandemic levels, below $50 billion in 2025, we would now face a far more concerning current account deficit. With the continued outflow of financial capital, the Central Bank would likely need to sell more foreign reserves, significantly increasing Brazil’s external vulnerability and further depreciating the currency, which would push inflation and interest rates higher.”

BTG Pactual forecasts a $87 billion trade surplus in 2025, based on the criteria set by the Ministry of Development, Industry, Commerce and Services (MDIC). The bank expects exports to benefit from a 10% increase in agricultural output, following a 7.5% decline in 2024. Additionally, oil production is projected to expand by 10% in 2025 after setbacks last year caused by maintenance shutdowns and operational delays due to regulatory agency strikes.

Commodities will continue to play a key role in Brazil’s export profile, Ms. Ferrão noted. “A weaker exchange rate helped boost export volumes despite lower production by making Brazilian goods more competitive internationally. This led exporters to allocate a greater share of production to foreign markets—a trend that will likely persist throughout 2025 as production increases.”

Uncertain outlook

For economist Livio Ribeiro, a partner at BRCG and researcher at the Getulio Vargas Foundation’s Brazilian Institute of Economics (FGV Ibre), the 2025 trade balance remains highly uncertain. He forecasts a $80 billion surplus, also using MDIC’s methodology. “On one hand, we have positive factors, such as the increase in grain harvests compared to 2024. But on the other hand, we face significant uncertainties related to external demand and prices—both the dollar value of goods produced and sold and the exchange rate itself,” he explained.

José Augusto de Castro, president of the Brazilian Foreign Trade Association (AEB), said the organization projects a $93 billion surplus for 2025. However, he expressed concern about the potential impact of tariff policies introduced by Mr. Trump’s administration on commodity prices.

Ms. Ferrão of BTG Pactual noted that if the U.S. imposes tariffs on Chinese goods, further escalating the trade conflict between the two nations, it could increase Chinese demand for Brazilian products. This is because China would likely retaliate with higher tariffs on U.S. goods, creating opportunities for Brazilian exports, she said. China could expand its purchases of Brazilian soybeans, oil and derivatives, and meat. Similar shifts occurred during the U.S.-China trade war that began in 2018, Ms. Ferrão added.

An increase in U.S. import tariffs on Chinese goods could also lead to a slowdown in China’s economic activity, potentially lowering the prices of commodities exported by Brazil and negatively impacting the country’s trade balance. The magnitude of the impact on commodity prices would depend on the extent of the slowdown in China’s economy.

The chart below reveals the pattern of container exports from Brazil to China between January 2021 and November 2024. The data comes from Datamar’s DataLiner.

Container Exports to China | Jan 2021 – Nov 2024 | TEUS

Source: DataLiner (click here to request a demo)

For Ms. Ferrão, the net effect could be positive if Brazil can reposition its products in global markets. A weaker exchange rate would aid this repositioning, she added. Another critical factor is whether the slowdown in China’s economy remains moderate, avoiding a significant additional decline in commodity prices.

However, Ms. Ferrão cautioned, the net effect could turn negative if the drop in commodity prices is substantial and Brazil fails to capitalize on opportunities to expand its exports to China and other countries facing similar trade barriers imposed by the U.S. The overall impact, she explained, will depend on the scale of tariff increases, their effect on commodity prices, and Brazil’s ability to adapt to the changing scenario.

Oil production

Mr. Ribeiro, of BRCG, also highlighted the potential influence of Mr. Trump’s plans to boost U.S. oil production, which could affect Brazil’s oil exports. In 2024, oil was Brazil’s top export product.

More pessimistic, Luis Otávio Leal, chief economist at G5 Partners, said regardless of the scenario, Brazil stands to lose in the U.S.-China trade conflict. “Either due to a reduction in global trade from a trade war or because the U.S. and China reach an agreement, which could reduce Brazilian agricultural exports to China.”

Mr. Leal added that soybean exports would likely remain unaffected in 2025. “If an agreement is reached between China and the U.S. during the first half of the year, it could pose challenges for the second-half corn harvest and the 2026 crop. But for this year, we’re currently in the soybean export period. Given the timing and the expectation that U.S.-China negotiations won’t progress quickly, the 2025 soybean exports are somewhat insulated,” he explained.

Mr. Leal estimates Brazil’s trade surplus in 2025 to reach around $85 billion, possibly nearing $90 billion. He recalled the significant drop in the 2024 surplus compared to the $98.9 billion achieved in 2023. However, this decline was not solely due to falling exports but also a sharp increase in imports. According to SECEX data, export values in 2024 decreased by 0.8% compared to 2023, while imports rose by 9%. In 2025, exports are expected to increase, while imports are anticipated to decline, following the sharp rise in 2024.

Lucas Barbosa, an economist at AZ Quest, pointed out that in 2024, imports saw a significant volume increase, but their value didn’t grow as much due to falling prices. Imported volumes grew by 17.2% in 2024 compared to the previous year, while average prices dropped by 7.4%, according to SECEX data.

For 2025, Mr. Barbosa expects a stabilization in import volumes due to the anticipated slowdown in domestic economic activity. “Imports of capital goods, affected by rising interest rates, and consumer goods, which rely on income and credit, are likely to decline,” he noted.

On the export side, Mr. Barbosa highlighted the positive outlook for agricultural output and the favorable impact of a depreciated currency. He projects a $80 billion trade surplus for 2025, based on an exchange rate slightly below R$6 to the U.S. dollar. “The recent depreciation trend could boost exports,” he explained.

Additionally, Mr. Barbosa emphasized the diversification of Brazil’s export portfolio. “Certain items are starting to gain relevance, not only in terms of value but also as new export opportunities,” he said, citing coffee, cotton, sugar, and steel as examples. “Meat—beef, pork, and poultry—continue to be a success story for Brazil’s export industry and are expected to contribute positively in the coming years,” he added.

Source: Valor International 

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