Brazil’s trade deficit in January was the biggest on record, after a rise in raw material exports failed to offset greater imports of consumer and capital goods, the Trade Ministry said on Monday.
Brazil’s trade deficit of $4.057 billion, a hair wider than the $4.035 billion gap registered in Jan. 2013, was still slightly smaller than expectations for a $4.6 billion gap, according to the median forecast of 17 analysts surveyed by Reuters.
The trade balance is a serious challenge for Brazil, which is struggling with weaker demand for its exports because of the still-subdued global economy. Low productivity among Brazilian manufacturers, meanwhile, is making their products less competitive against foreign rivals.
The worsening trade position raises additional concerns about Brazil’s currency, the real, and inflation that is already running persistently close to the government’s target ceiling of 6.5 percent. As slowing exports and foreign investment reduce the inflow of dollars to the economy, the real weakens and in turn makes imports more costly.
Exports of raw materials rose 5.3 percent in January on an annual basis as crude oil shipments grew 135 percent to $1.1 billion, the trade ministry said. In contrast, semi manufactured goods retreated 5.8 percent, while manufactured products slipped 2.6 percent.
Imports in January were marked by an 8.8 percent rise in consumer goods, a 7.1 percent increase in capital goods, and a 19 percent drop in fuels and lubricants.
Last year Brazil posted its smallest trade surplus in more than a decade as imports of fuel and consumer goods gained speed while the value of key export products like soy and corn eased.
Brazilian authorities believe that an improvement in the economies of the United States and Europe will help exports rebound this year. An expected increase in the production of oil and fuels this year will also offset imports of oil derivatives, officials have said.
However, a steep depreciation of the Argentine peso in recent days could drag down exports of Brazilian cars and other manufactured products to its neighbor and key trade partner this year.