RIO DE JANEIRO: Brazil’s trade minister said China’s decision to devalue the yuan could hurt manufacturing exports, although he increased his estimate for the country’s trade surplus this year.
Minister Armando Monteiro said he does not expect any damage to Brazil’s commodities exports from a weaker yuan but warned that manufacturers may not have the same luck.
“The devaluation of the Chinese currency makes Chinese exports more competitive in global markets,” he told reporters in Rio de Janeiro. “As Chinese products have a large penetration in South American markets, they could replace some manufacturing exports from Brazil.”
Despite that warning, Monteiro forecast that Brazil’s trade surplus could reach $12 billion in 2015, above his previous estimate for a surplus of $8 billion to $10 billion this year, with the Brazilian real more than 24 percent weaker against the dollar since Jan 1.
Brazil posted a trade deficit of nearly $4 billion in 2014, its first in 14 years. So far this year, the country has amassed a surplus of $5 billion, according to the minister.
“There has been a very sharp drop in imports coupled with a import substitution move,” Monteiro said. “Our exports are also growing in volume. If we had the same prices of the past year, our trade surplus would have topped $10 billion by now.”
