BIS: China’s lower economic growth weighs more on Brazil

Brazil is the second emerging country most vulnerable to the economic slowdown in China. A 1-percentage point drop in the Asian giant’s GDP would be associated with a roughly 0.7-percentage point reduction in Brazil’s economic performance after one year, according to an estimate from the Bank for International Settlements (BIS). 

Last year, China’s GDP grew 8.1 percent. However, the country’s strict zero-Covid policy and bad economic results disclosed in recent months have made financial institutions reduce their forecasts for the nation’s economic growth this year. The OECD, for instance, almost halved its estimates for the country’s GDP compared with 2021.

Per BIS, many emerging markets are highly exposed to this slower Chinese growth, “especially countries in emerging Asia and some commodity exporters.” 

China is a major importer of commodities worldwide — besides being Brazil’s main trading partner. If stagnant, the country will thus demand fewer agricultural and mineral commodities, such as soybeans, beef, iron ore, and crude oil — the main Brazilian export products to the country. 

And as The Brazilian Report has shown, China’s zero-covid policy has also been creating issues concerning port terminals, supply chains, and demand, spelling turmoil for Brazilian companies as freight and inputs become more expensive.

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