Brazil posted its worst monthly trade deficit on record in January due to a surge in imports of fuel and a slight drop in exports, trade ministry data showed on Friday.
Brazil posted a trade deficit of $4.035-billion (U.S.) in January, the widest gap since 1959, according to the earliest trade data available on the central bank’s website. The gap was wider than $3.4-billion median forecast in a Reuters poll of 17 analysts.
The weak result reflects the challenges facing the Brazilian economy as the global slowdown curbs demand for its products and local exporters struggle with sky-high costs that have made them less competitive.
Exports in January fell 1.1 per cent versus the same period in 2012 while imports rose 14.6 from the previous year.
Foreign trade secretary Tatiana Prazeres said the record deficit was mainly due to fuel imports from 2012 that were included in this year’s trade balance after changes in the accounting procedures of the national tax agency.
She said the country could again post trade deficits in February and March because of $2.9-billion worth of fuel imports from 2012 that will be included in the balance of those months.
“Everything should return to normal after March,” Ms. Prazeres told reporters.
As Brazil’s economy has grown in recent years, domestic demand for gasoline and diesel has outstripped the refining capacity of state-led oil company Petrobras, forcing it to import growing amounts of refined fuel. Gasoline imports by Petrobras surged 56 per cent in December.
Ms. Prazeres said the government expects exports in 2013 to remain at levels similar to the previous two years, but she declined to give an exact estimate.
“Our objective is to keep exports at levels similar to the high numbers we saw in the last two years,” Ms. Prazeres said.
Even though exports make up only about 10 per cent of Brazil’s $2.5-trillion gross domestic product, they are considered a key part of the economy by President Dilma Rousseff’s government.
Ms. Rousseff has offered billions of dollars in subsidized lending to help exporters, mostly those who produce manufactured goods. She has also raised trade barriers on dozens of imported products to protect local industry.
Brazil is also backing one of its own, ambassador Roberto Azevedo, to head the World Trade Organization in a bid to increase its clout in the struggling trade club.
Still, Brazil posted its smallest annual trade surplus in a decade last year. The commodity powerhouse’s trade surplus fell 35 per cent to $19.44-billion in 2012, the weakest performance since 2002.
Dwindling profits for exporters could hit business confidence at a time when the Brazilian economy is struggling to recover after two years of below-trend growth.
In a sign that the recovery remains fragile, industrial output failed to grow in December from November with a sharp drop in capital goods output suggesting lacklustre investment ahead.