What Can Be Expected from the External Sector in 2024

BRAZIL ECONOMICS - Report 11 Mar 2024 by Affonso Pastore, Cristina Pinotti, Paula Magalhães and Diego Brandao

With the increasing importance of imports of cryptoassets and small value transactions, considered in the trade balance that integrates the Balance of Payments calculated by the Central Bank, the estimates need to be carried out with care. The traditional trade balance of imports, estimated by the SECEX, set a record of US$ 99 billion last year, and our projections indicate they will continue to be strong in 2024, probably amounting to US$ 105 billion. On the other hand, growing sales of petroleum and iron ore should cause exports to reach US$ 348 billion (US$ 340 billion in 2023), and the behavior of imports will reflect increased domestic demand, especially with regard to gross fixed capital formation, which should increase during the rest of the year. Hence, the value of imports should reach US$ 244 billion (US$ 241 billion in 2023), due to a greater quantum, which will offset the downward trending prices of imported products. Based on conciliation of the statistics of the SECEX with those disclosed by the Central Bank (reference for the balance of payments), we expect a trade surplus of US$ 77 billion this year (US$ 81 billion in 2023). The slight decline in comparison with 2023 can be attributed to the higher purchases of cryptoassets, partly offset by the reduction of imports of items with small value, due to higher taxes on those goods.

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