Economic data out of Brazil shows inflation continues to climb.
Why is this important? Brazil is the 9th largest receiver of US exports. Approximately 3% of exports go to Brazil and if consumers in Brazil can’t afford to pay for goods then they won’t sell and that will cause US exports to decline.
Here are some key stats from the Office of the United States Trade Representative:
Brazil was the United States’ 9th largest goods export market in 2019.
U.S. goods exports to Brazil in 2019 were $42.9 billion, up 8.7% ($3.4 billion) from 2018 and up 64.2% from 2009. U.S. exports to Brazil account for 3% of overall U.S. exports in 2019.
The top export categories (2-digit HS) in 2019 were: mineral fuels ($12 billion), aircraft ($7.0 billion), machinery ($4.9 billion), electrical machinery ($3.4 billion), and organic chemicals ($2.0 billion).
U.S. total exports of agricultural products to Brazil totaled $610 million in 2019. Leading domestic export categories include: wheat ($86 million), feeds & fodders not elsewhere specified or indicated ($49 million), eggs & products ($40 million), dairy products ($35 million), and prepared food ($34 million).
U.S. exports of services to Brazil were an estimated $24.6 billion in 2019, 8.4% ($2.2 billion) less than 2018, but 81.0% greater than 2009 levels. Leading services exports from the U.S. to Brazil were in the travel, transport, and telecommunications, computer, and information services sectors.
Source: USTR.GOV
Anyone that thinks inflation is going to magically disappear anytime soon is going to be caught off guard. We hope inflation dies down however we are pragmatic investors and plan for all situations as best we can.
Stay tuned…