The Good Performance of Exports

BRAZIL ECONOMICS - Report 20 Jul 2020 by Affonso Pastore, Cristina Pinotti, Marcelo Gazzano and Paula Magalhães

Even with a weaker real exchange rate than the average during the period since the Real Plan (1994 to date), there was no way to expect Brazilian exports to expand in 2020 in a period of deep global recession. However, the slow pace of the recent decline has been surprising. The reason is the high share of basic products in the country’s exports. The sales of these products have continued to climb, with prevalence of exports to China. Besides the better reaction of the Chinese economy to the pandemic (its GDP is still growing), the weak real exchange rate has been helping the competitiveness of Brazilian exports to China against the backdrop of its trade war with the United States. However, the stimulus of a weak real exchange rate has not been able to raise Brazil’s exports to other countries, in particular to the USA and Argentina, whose economies are more affected by the pandemic. On the import side, there have been no surprises: the Brazilian recession has been eroding purchases of capital goods, intermediate goods and consumer goods. Thus, the tendency will be for a strong rise of the trade surplus in 2020.

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