Brazil, the Latin American giant, best known for its soccer prowess, is the 8th largest economy in the world. It’s also one of the only developing economies to maintain a consistent trade surplus. However, the prolonged economic crisis, triggered by political instability has brought trouble upon this South American nation's economy. Exports too have been in a state of steady decline since CY2011. A member of the BRICS bloc, the world watches eagerly as Brazil dribbles its way through multiple economic and trade traps.
TDB INTELLIGENCE UNIT | August 2017 Issue | The Dollar Business
Manufacturing powerhouse China happens to be Brazil’s biggest trade partner. In fact, Brazil is one of the few countries with which China has a trade deficit and a pretty large one at that. And despite several trade agreements, most notably MERCOSUR and BRICS, India remains the Latin American nation's 12th largest trading partner. Interestingly, Brazil's exports have remained stable over the years, despite its wobbly economy.
Brazil mostly imports machinery, mechanical and electrical appliances, mineral fuels, vehicles & parts thereof and organic chemicals. In fact, in CY2016, these products together constituted 48% of its total imports.
Brazil’s exports used to be highly dependent on ores, slag & ash, and mineral fuels, oils & products of their distillation. However, in the recent years, products such as soya beans, bovine meat, and wood and its articles & charcoal have become a significant part of its exports basket.
In FY2017 the Latin American nation imported a significant amount of pesticides and fungicides from India. The country also imports a large volumes of organic chemicals, medicines, automobile parts and accessories, mechanical appliances and synthetic yarns from India.
In FY2017 mineral fuel and sugar and its confectioneries formed the largest chunk of Brazil's total exports to India. India has also been sourcing a large volume of soya oil and mineral ores from Brazil.
Brazil typically enjoys a trade surplus. In CY2016, despite a y-o-y drop of roughly 11% in its total trade, trade surplus closed at $25.74 billion – the largest in the last decade. Having said that, Brazil's exports have been on a decline since CY2011 due to a drop in exports of commodities.
The bilateral trade between Brazil and India has grown by about 88.15% over the last decade. The trade balance between the two though has seen many reversals. Surprisingly, bilateral trade has been witnessing a sharp decline after reaching a record high of $11.36 billion in FY2015.
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