Today is time to talk about the latest trade balance outcome that was just released in Brazil. Indeed, Brazil posted a trade surplus of $ 3.71 billion in April, a significant increase when compared to the surplus posted in March.
The main news on the trade front is the fact that China became the leading destiny for Brazilian exports. Besides that, the trade between both countries reached $3.2 billion in April. In contrast, trade between Brazil and the United States reached $2.8 billion in the same period. In the year until April, trade between China and Brazil reached $10.2 billion, compared to $8.9 billion in the same period last year. Clearly, the fact that China is expected to grow 7% in 2009 is explaining the good performance of Brazil´s trade with China.
In part due to the poor economic conditions, the trade between Brazil and the United States decreased to $ 8.9 billion in the first four months of 2009 from $14.8 billion in the same period of 2008.
According to the data, we observed an improvement in the exports and a decrease in imports. All in all, China has replaced the US as the main source of Brazilian exports. In other words, brazilian exports to China in the first four months of 2009 reached $5.6 billion. The United States came in second with $4.9 billion. We can´t and should not forget Argentina, who is the third largest country of destination of Brazilian exports with $3.1 billion.
So, why do we care about China and the fact that it has replaced the US as the leading market for Brazilian exports? The answer is because we believe that Brazil will not present a very severe recession in 2009 (with growth reaching 0.9%) mostly because of the strong ties between both countries. Export relationships are developed though time, it takes a while to open up and conquer markets. Brazilian exports to China have been increasing and improving since 1993. Different from financial channels, that are extremely volatile, trade channels are more stable. Therefore, the linkages between Brazil and China seem to be growing in times of world crisis. This suggests that Brazil will benefit from China´s windfall and might even use China´s resources to shield from the world financial crisis.