Trade in Goods
From 2003 to 2007 Brazil's total merchandise trade grew significantly, at a nominal annual average rate of 23.3%, reflecting solid economic growth and strong external demand for Brazilian products. During the same period exports grew at an average annual rate of 21.7%, partly reflecting higher commodity prices, and imports at an average annual rate of 25.7%. While the value of exports was over 50% higher than the value of imports during 2003-2006, the trade surplus has been shrinking since 2006 due to faster expansion of imports.
In value terms, exports increased by about 120% from 2003 to 2007, reaching US$160.6 bn. Exports of primary products more than doubled, reaching US$80bn in 2007. Agricultural exports doubled, reaching US$48bn. Exports of mining products tripled, reaching US$32bn in 2007, partly as a result of strong demand from other emerging countries, while exports of manufactured goods totalled almost US$76 billion. Although Brazil's export structure remained relatively stable over the 2003-2006 period, in 2007 primary products displaced manufactured products as the main export earner, as a result both of strong demand and high commodity prices. Due to the strong export performance of primary products, the share of manufactured products in total exports decreased from 50.9% in 2003 to 47.2% in 2007, despite doubling in value from US$37.3bn to US$75.8bn. Machinery and transport equipment was the leading subsector among exports of manufactured goods, followed by automotive products and chemicals.
The total value of imports reached US$120.6bn in 2007, which was 2.5 times the 2003 figure. Imports of primary products increased faster than imports of manufactured goods during 2003-07, with annual average growth of 27.8% and 24.8% respectively. However, manufactured goods remained the largest import sector, accounting for 70.6% of total imports in 2007 compared to 72.5% in 2003. Machinery and transport equipment remained the most important single import category, representing more than 36% of total imports. The share of primary products increased by almost 2 percentage points over the period, to 29.4% in 2007; fuels and other mining products, the second largest import category, accounted for over 23% of total imports. The share of agricultural imports fell by 2.5% over the period, standing at 6% in 2007. In 2008, total agricultural exports amounted to US$197.9bn and imports to US$173.2bn.
| TRADE BALANCE – GOODS – EXPORTS, IMPORTS AND OVERALL TRADE | |||
|---|---|---|---|
| YEAR | EXPORTS (US$bn) |
IMPORTS (US$bn) |
OVERALL TRADE (US$bn) |
| 2008 | 197.9 | 173.2 | 371.1 |
| 2007 | 160.6 | 120.6 | 281.2 |
| 2006 | 137.5 | 91.4 | 228.9 |
| 2005 | 118.3 | 73.6 | 191.9 |
| 2004 | 96.5 | 62.8 | 159.3 |
| 2003 | 73.1 | 48.3 | 119.4 |
| 2002 | 60.4 | 47.2 | 107.6 |
Source: WTO
Trade in Services
Brazil has traditionally had a deficit in services, and it has been increasing rapidly since 2004 due to the fast growth in imports. In 2007 exports of services (receipts) totalled US$23.81bn, while imports (payments) were US$36.86bn. During 2003-2007 the largest deficits were in equipment leasing, transportation, and travel. The deficit in transportation increased significantly, as payments more than doubled from 2003 to 2007, reflecting Brazilian airlines' reduced participation. The travel industry reverted to a deficit in 2005, due mainly to a sharp increase in travel payments made by Brazilians travelling abroad, impacting upon the services account. Brazil also has a traditional deficit in several areas of the services sector (with the exception of professional and technical services, in which a widening surplus was registered during 2003-07).
Source: WTO
Balance of Payments
Throughout 2003-08 Brazil posted a surplus in its balance of payments current account, contrasting with the recurrent deficits in previous years. However, after reaching 1.8% of GDP in 2004, the surplus began to shrink, falling to just 0.1% of GDP in 2007. The current account balance deteriorated further in the first half of 2008, when a deficit of US$17bn was posted, with the continued increase in imports of goods and services not being matched by the increase in exports.
Brazil's income balance is traditionally in significant deficit: profit remittances and other operations linked to foreign investment in Brazil largely exceed inflows. Interest payments on the public sector's foreign debt also contribute to the deficit. However, as these fall in line with the reduction of Brazil's external debt, the share of profit remittances in the deficit is likely to become more important, particularly since Brazil is an increasingly large recipient of Foreign Direct Investment.
The current account surplus posted between 2003 and 2008, combined with a surplus in the capital and financial account since 2005, has allowed a sizeable accumulation of foreign exchange reserves, which exceeded US$230bn in November 2009 equivalent to 13 months of imports of goods and services in early 2009 (equivalent to 13 months of imports of goods and services at early-2009 levels).
Source: WTO
| FOREIGN RESERVES | |
|---|---|
| YEAR END | US$bn |
| 2009 | 230.000 (until November) |
| 2008 | 193.783 |
| 2007 | 180.334 |
| 2006 | 85.839 |
| 2005 | 53.799 |
| 2004 | 52.935 |
| 2003 | 49.296 |
| 2002 | 37.823 |