Emerging countries such as China and Brazil are very prompt in publishing trade data. So their figures provide a timely snapshot of economic developments.
Brazil’s economy is heavily dependent on China, due to its mining industry. Worryingly, July polyethylene (PE) data from Global Trade Information Services thus confirms the slowdown underway in the BRIC countries (Brazil, Russia, India, China).
Brazil both imports and exports PE. The pattern is that it exports more when its economy is weak, and vice versa. As the chart shows:
• 2012 exports (red column) are up 316% versus 2010 (blue)
• Imports are declining, except from low-cost SEA (up 388%)
• NAFTA imports are down 20%; Middle East down 6%; NEA down 87%
• Exports to the rest of Latin America have risen 29%
• Exports to Europe have fallen 50% as its economy hits recession
Unsurprisingly, Brazil’s new government is becoming seriously concerned about the outlook. Equally, the trade data suggests the US will struggle to replace lost China sales in Latin America.
GDP growth is forecast at just 2% this year, down from 7.5% in 2010 and 2.7% in 2011. In response, the government has announced a R$133bn (US$66bn) infrastructure stimulus package, and plans to sell off parts of the road, rail, port, airport and waterways networks.
This would suggest it does not expect a major recovery in China in the short to medium-term. Equally, the chart confirms the American Chemistry Council’s conclusion that the US will find it difficult to increase its exports, despite its shale gas cost advantage.