Good morning! This week, we talk about Brazilian trade with South America. And the lack of consistent and efficient antitrust regulations. (This newsletter is for platinum and gold subscribers only. Become one now!)
Brazil’s exports to Mercosur at a low
Between January and October, Brazilian exports to Mercosur countries (Argentina, Uruguay, and Paraguay) have dropped 33 percent from last year. A similar trend has been seen with other trading partners in South America—exports to the region as a whole are down 23 percent, with growth only among shippings to Peru and Colombia. And the outlook is rather bleak, as political turmoil has created uncertainties in Chile, Bolivia, and Colombia.
Why it matters. Mercosur countries are the destination of USD 21 billion in Brazilian exports. These countries absorb 20 percent of Brazil’s manufactured goods, and 26 percent of the country’s products of high technological complexity—more than China, the U.S., or the European Union.
Not a surprise. For the first time in 16 years, Brazil will record a trade deficit with Argentina. Brazilian exporters saw this shift coming after the neighboring country’s massive financial crisis. With the Argentine Peso plummeting this year, consumers are buying much less—driving imports from Brazil down.
Bad...