Hope lingers that the record is still in reach

Brazil’s trade surplus this year is likely to fall short of prior forecasts, according to private economists and an Economy Ministry official.

This is due to the spike in the cost of imported fuel and fertiliser, which have offset strong exports of other raw materials. The official, who requested anonymity to discuss the ministry’s confidential analysis, said Brazil’s trade surplus this year is on track to miss the US$81.5 billion projected earlier this month.

However, the source hinted that Brazil could still beat last year’s record US$61.4-billion surplus. Reuters earlier reported that market expectations had been holding since April around a US$70-billion surplus based on median forecast in a weekly central bank survey of economists.

Interestingly, the outlook has slid over the past month to around US$66 billion last week. The shifting consensus shows how even top raw material producers such as Brazil, the top exporter of soybeans, beef and sugar, plus a major global supplier of iron ore and crude oil, face mixed fortunes from this year’s spike in commodity prices.

Leading economist at Asa Investments, Leonardo Costa, argued that strong fuel imports will force him to revise down his previous estimate for a $72-billion surplus this year. According to him, “in addition to being a relevant oil exporter, Brazil is highly dependent on its (imported) derivatives”.

The Economy Ministry is expected to update its forecast for the trade balance in early October.