The Brazilian Foreign Trade Association (AEB) released in December its first official forecast for Brazil’s balance of trade in 2018. The association estimates exports will reach US$ 218.9 billion, an increase of 1.1% in comparison to the US$ 216.4 billion expected for 2017. On the other hand, imports are expected to close 2018 at US$ 168.6 billion, representing an 11.7% growth over the US$ 151.0 billion reached in 2017.

The poor performance projected for Brazilian exports in the next year comes after an astonishing double-digit growth in 2017, mainly driven by agricultural commodities which benefited from the devaluation of Brazilian real. If the figures confirm AEB’s expectations, Brazil will close the current year with a 16.9% increase in total exports. The reason why AEB is pessimistic about 2018 is that the Brazilian Institute of Geography and Statistics (IBGE) announced there will be a breakdown in the production of soybeans and maize, two of the main products in Brazil’s export portfolio. In this context, even with a projected growth of 4.3% for manufactured good, exports will maintain at the same level, increasing by only 1.1%.

On the other hand, Brazilian imports are expected to progressively return to levels pre-crisis. Since the beginning of the country’s economic turmoil, imports plummeted. In the last three years, the country accumulated negative results, reaching -4.4% in 2014, -25.2% in 2015 and -19.8% in 2016. With currency stabilized and the improvement of economic indicators in 2017, companies felt confident to start importing again, resulting in a 9.8% increase by the end of the current year, if AEB’s forecasts are confirmed.

For 2018, the projected rise in household’s expenditure, the reduction of unemployment and the drop in debt delinquency index, aside from positive GDP growth forecast, combine to build an optimistic outlook for growing Brazilian imports.

The expected 11.7% increase in total imports will open new opportunities for UAE suppliers. AEB expects chemical fertilizers to grow at a higher rate, as well as oil lubricants that are projected to grow 19.6%. Consumer goods may increase by 41.6% in 2018.

From January to September, UAE non-oil exports to Brazil grew by 38.3%, moving from US$ 69.4 million to US$ 95.9 million. Leading this growth there are traditional products such as urea (+60.4%), sulfur (+13.3%), polyethylene (+59.5%) and iron pipes (+417.3%). But new products recently introduced into the Brazilian market may also increase in 2018, such as shisha tobacco, electric outlets, plastic packaging, dried dates, olives, fire equipment, cosmetics, and others.

To take advantage of this promising scenario, Dubai Exports overseas trade office in Brazil has been matchmaking Dubai-based companies to major buyers in the country, as well as offering market assessment and benchmarking to expand UAE presence in the Brazilian market.

 

Source: AEB