Brazil's surplus with China amounts to R$ US$ 28.8 billion from January to September, says FGV

China was responsible for 68% of the Brazilian trade balance accumulated from January to September 2020. Brazil's surplus with China was US$ 28.8 billion in the period. The data comes from the Foreign Trade Indicator (Icomex) released by Fundação Getulio Vargas (FGV).

The trade balance balance in September was US$ 6.2 billion, the highest in the monthly historical series since 2001. From January to September, the surplus was US$ 42.2 billion, the second highest. According to FGV, the expectation is that the country will end the year with a surplus of approximately US$ 58.5 billion.

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The volume exported by Brazil grew by 0.4% from January to September 2020, compared to the same period in the previous year. The volume imported in the period decreased by 8.1%. Compared to September 2019, exports fell by 4.0% in volume in September this year, while imports shrank by 18.7%.

“The sharp devaluation of the real effective exchange rate helps contain imports and lowers the prices of Brazilian products in foreign trade”, pointed out the FGV, in a note.

However, the strong devaluation of the Brazilian currency against the dollar also increases the costs of sectors that use imported inputs and components, such as the automotive and electronics segments.

“Agriculture is also burdened in terms of its inputs; however, the weight of imports for this sector is smaller and Chinese demand has ensured the growth of our exports. Another relevant issue is how foreign trade operators are analyzing the devaluation. Foreign trade requires a look that goes beyond the short term. In this context, even with the strong devaluation of the real, exporters and importers tend to be more cautious and may be postponing decisions, such as, for example, replacing foreign suppliers with domestic ones”, added FGV.

Source: Notícias Agrícolas

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