Brazil recorded its largest February trade deficit ever, deepening a trade gap this year that underscores the uncompetitiveness of local industry and a voracious appetite for imports.
The commodities powerhouse posted a trade deficit of $2.125 billion in February, the trade ministry said, its second straight monthly shortfall.
The deficit was below market expectations for a $3.05 billion gap, according to the median forecast of 20 analysts surveyed by Reuters. The country posted a deficit of $4.06 billion in January, its largest monthly trade gap ever.
Last year the country posted a February trade deficit of $1.279 billion.
The trade balance is a serious challenge for Brazil, which is struggling with weaker demand for its exports due to a still-subdued global economy. Low productivity among Brazilian manufacturers, meanwhile, has made their products less competitive against those of foreign rivals.
The worsening trade position raises additional concerns about weakness in Brazil’s currency, the real, and persistently high inflation. As slowing exports and foreign investment reduce the inflow of dollars to the economy, a weaker real makes imports more costly.
A drop in the prices of some Brazilian exports like soy and economic problems in neighboring Argentina have raised fears that Brazil may post a smaller trade surplus than last year or even a deficit.
In 2013, Brazil posted its smallest trade surplus in more than a decade as imports of fuel and consumer goods gained speed while exports eased.
Exports of raw materials fell 8.5 percent in February on an annual basis to $7.17 billion, the trade ministry said. Semi-manufactured goods exports retreated 8.7 percent, while manufactured products slipped 9.2 percent.
Imports in February were marked by a 2 percent rise in consumer goods and a 7.9 percent increase in fuels and lubricants. (Reuters)