Brazil Trade Surplus Fell 20% Last Year on Currency Gains, Economic Growth

Brazil’s trade surplus shrank 20 percent last year, as domestic consumption boost imports and manufacturers cope with a real rally.

The trade surplus fell to $20.3 billion in 2010 from $25.3 billion in the previous year, the Trade Ministry said today. The December trade surplus was $5.4 billion. Economists expected a trade surplus of $4.5 billion last month, according to the median forecast from 12 economists surveyed by Bloomberg.

Foreign sales reached a record $201.9 billion last year, the ministry said. That’s an increase of 32 percent over the $153 billion sold abroad in 2009. Brazil’s imports were $181.6 billion in 2010 and $15.6 billion in December, the ministry said.


The real’s 5.01 percent gains against the U.S. dollar coupled with the fastest economic growth in more than two decades boosted imports to Latin America’s biggest economy last year.

Brazil tripled to 6 percent in October a tax on foreign purchases of fixed-income securities in a bid to contain the currency gains. The government may take new measures to curb the strength of the real, Finance Minister Guido Mantega said last week.

Brazil’s economy likely grew 7.3 percent last year, fueled by domestic demand, credit expansion and investments, the central bank said on its quarterly inflation report Dec. 22. Economists surveyed by the central bank expect GDP growth of 4.5 percent this year, according to a weekly survey released today.

Rising Real

Brazil’s real rose 0.4 percent to 1.6548 per U.S. dollar at 9:28 a.m. New York time. In the overnight interest-rate futures market, the yield on the contract due in January 2012, the most traded in Sao Paulo stock exchange today, fell one basis point to 12.03 percent. Contracts due in April 2013 fell 9 basis points to 12.2 percent.

After raising Brazil’s benchmark interest rate by two percentage points last year to 10.75 percent from a record low 8.75 percent to prevent “overheating,” policy makers kept borrowing costs unchanged for the third straight meeting last month.

Rate Increase

Brazil’s central bank signaled last month it may start increasing interest rates in January, after forecasting inflation will be faster than previously expected.

Policy makers raised their 2011 inflation forecast to 5 percent, up from 4.6 percent in September, according to the so- called reference scenario published in the bank’s quarterly inflation report.

The bank forecasts inflation will also exceed its 4.5 percent target in 2012, when consumer prices will rise 4.8 percent. The bank’s reference scenario assumes the benchmark interest rate remains unchanged.

Brazil’s current account deficit will widen to $64 billion in 2011, up from $49 billion in 2010, according to central bank estimates published Dec. 21. Previously the bank had seen the 2011 deficit at $60 billion.

To contact the reporter on this story: Iuri Dantas in Brasilia at at idantas@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

Brazil Trade Surplus Fell 20% Last Year on Currency Gains, Economic Growth