Brazil clocks record trade surplus in '04
Associated Press
Sao Paulo, January 4, 2005
Brazil racked up its biggest trade surplus in history last year, but the country's export boom of everything from soybeans to automobiles is expected to ease in 2005. South America's largest economy sent $96.5 billion (euro71.4 billion) of goods abroad in 2004 while importing $62.8 billion (euro46.5 billion), giving Brazil a trade surplus of $33.7 billion (euro24.9 billion) that eclipsed the previous record of $24.8 billion (euro18.4 billion) set in 2003.
The export increase was fueled in part by rising worldwide demand for commodities like iron ore, sugar and soy -- all of which are produced in Brazil. But experts expect that high commodity prices will retreat somewhat in 2005.
While Brazilian exports are expected to rise an additional 10 per cent to 15 per cent in 2005, the increase won't come close to the 32 per cent surge in 2004 compared to 2003, said Trade and Development Minister Luiz Furlan.
And the overall trade surplus is likely to drop because imports to Brazil could rise between 20 per cent and 30 per cent, he said. Still, Furlan said Brazil would try to remove some of the country's long-standing impediments to export growth.
"The Government is doing its part in cutting down on red tape, improving infrastructure to remove bottlenecks...and working hard to open new markets in areas such as Asia, eastern Europe and west Asia," he said.
The recent rise in the value of the Brazilian currency, the real, could also crimp demand as the Brazil's products become more expensive overseas. The real ended 2004 at a two-and-a-half year high of 2.65 to the dollar, up nearly 10 per cent against the greenback for the year.
The 2004 trade surplus was good news for President Luiz Inacio Lula da Silva, elected in 2002 on a platform of reviving Brazil's moribund economy and putting it on a path toward a slow, sustainable growth and the creation of millions of new jobs for the nation of 182 million.
Brazil's economy grew five percent last year after experiencing anemic growth of less than one per cent in 2003, Silva's first year in office. Experts expect the country's 2005 economic growth to come in at about 3.5 per cent.
In his first address of 2005, Silva focused on the economy, telling Brazilians in a Sunday radio and TV speech that the coming year will usher in more growth, jobs and better distribution of wealth in a country where the divide between the rich and poor is one of the most profound in the world.
"This is all possible because the Brazilian people in 2002 had the courage to bet on change for Brazil," Silva said, referring to the country's growth prospects.
Silva, Brazil's first elected leftist leader, was criticised in 2003 for sky-high interest rates and unemployment that reached 13 per cent but his popularity increased in 2004 as the economy staged a strong comeback.
He acknowledged that the orthodox economic policies adopted by his administration were "bitter" remedies in a country where tens of millions of people live on less than $1 (euro0.74) a day, but said they were necessary to halt Brazil's traditional boom and bust economic cycles.
"The path we chose was for meaningful and profound changes," Silva said. "And these take a little while to show results, but when they happen they are solid and long-lasting."
© HT Media Ltd. 2004.