Brazil H1 chem deficit falls 17.6% to $10.3bn

A trade group has renewed its call for Brazil’s government to take action and make the country’s exports competitive again. Exports have slipped 7.4% to $5.9bn. Sunset lights up a chemical plant, above, operating near Salvador, Brazil. (JIM PICKERELL/REX/Shutterstock)

MEDELLIN, Colombia (ICIS)–Brazil’s trade deficit in chemical products totalled $10.3bn in the first half of 2016, down by 17.6% from a deficit of $12.5bn in the year-ago period, according to figures released on Friday by trade group Abiquim.

Imports in the six months to June were down by 14.2% year on year to $16.2bn, while exports slipped 7.4% to $5.9bn, the figures revealed.  

Fertilizers were the main imported product group during the first half, with purchases reaching $2.4bn, down by 10.2% compared with the same period in 2015.

In volume terms, imports of all chemical products rose by 9.7% to 17.2m tonnes. No figures for export volumes were provided.

In the 12 months to June, the sector’s accumulated trade deficit totalled $23.2bn, a “clear sign of the impact that weak domestic economic activity in the first months of the year has had on the nation’s chemical industry”, the group said.

Abiquim once again called on the government to prioritise measures that would boost the competitiveness of Brazilian exports, which are pivotal to economic growth, the association said.

According to its weekly survey of analysts, Brazil’s central bank this week said the domestic economy is expected to shrink by 3.25% in 2016.

GDP for 2017 is set to expand by 1.1%, marginally higher than the previous week’s 1.0% growth forecast, the bank said.

“The economy is expected to hit rock bottom this year, and 2017 should see some positive growth in economic activity,” said Alejandro Werner, the director of the International Monetary Fund’s (IMF) Western Hemisphere department. He made his comments in a blog published on the IMF’s global economic forum.

Still, efforts to deal with the downturn have been hampered by a political crisis that has left President Dilma Rousseff suspended and her leftist Workers’ Party frantically clinging to power.

The country’s Senate is expected to vote at the end of August on whether to permanently remove Rousseff, who has been accused of manipulating the state budget in the run-up to her 2014 re-election.  

Brazil’s more right-wing interim government, led by former Vice President Michel Temer, has pledged to introduce controversial austerity measures in an effort to hoist the country out of its economic malaise.

“The proposed consolidation strategy has been broadly welcomed by markets, and the government needs to focus on overcoming implementation changes,” Werner said.

To complement its fiscal adjustment plan, the IMF on Thursday told Brazil it should raise taxes and continue with structural reforms to increase productivity and competitiveness.

Petrochemical plants operate in the industrial zone of Manaus, Brazil. (JIM PICKERELL/REX/Shutterstock)

INSET IMAGE: Inside a biofuels plant in Sao Paulo, Brazil. (Sipa Press/REX/Shutterstock)