Brazil's Ministry of Industry, Foreign Trade and Services (MDIC) published the results of Brazil’s 2016 balance of trade. The country exported products worth US$ 185.2 billion and imported US$ 137.5 billion, achieving a surplus of US$ 47.7 billion, the best balance of trade result ever recorded. The largest surplus before had occurred in 2006, when it achieved US$ 46.5 billion.

Nevertheless, Brazil’s record surplus was only possible because, while exports fell by 3.5% in comparison to 2015, imports decreased by 20.1% in the same period. Purchases from other countries were the lowest since 2009, as a reflection of Brazilian economic turmoil that, aligned to currency instability, restrained imported products’ attractiveness in the domestic market.

But despite 20.1% drop on imports, the Secretariat of Foreign Trade of MDIC remarked there was a progressive decrease on import reduction rates: -33.4% on the first quarter of 2016, -23.9% on second quarter, -13.2% on third quarter and -6.1% on the last quarter of the year.

The improvement on import rates raise good expectations for 2017, when economic recovery – projected in 0.5% by the International Monetary Fund (IMF) – might push for higher demand on imported products. The Brazilian Foreign Trade Association (AEB) forecasts an increase of 7.2% increase on exports and 5.2% on imports as compared to 2016. Imports are estimated to achieve US$ 145.7 billion by the end of 2017, led by industrial inputs.

In order to strengthen economic recovery and improve Brazil’s global competitiveness, President Michel Temer has recently signed a Trade Facilitation Agreement with the World Trade Organization (WTO) that will allow a 40% decrease on the average time required for export and import operations.

Such forecasts indicate a promising scenario for UAE exports of industrial inputs, such as raw aluminum, steel, polyethylene and fertilizers. The Brazilian government recently reduced import taxes for more than 275 capital goods and exempted tariffs for a lot of 240,000 tons of unalloyed aluminum, which shows greater compromise on supporting industrial activity, generating opportunities for international providers.

 

Source: Brazil Ministry of Industry, Foreign Trade and Services (MDIC).