Brazil trade surplus narrows in June, potential drag on GDP growth

BRASILIA (Reuters) - Brazil’s trade surplus narrowed to $5.02 billion in June as imports rose and exports fell, the Economy Ministry said on Monday, with the shrinking year-to-date surplus suggesting net trade is a drag on overall economic growth.

The surplus in June was narrower than May’s $6.3 billion surplus, the $5.4 billion median estimate in a Reuters poll of economists, and the $5.79 billion surplus recorded in June last year.

Measured by the number of working days in each month, June’s trade surplus narrowed by 7.5% from May and by 4.2% from June last year. But over the whole month it narrowed far more dramatically, by 13.3% and 20.1%, respectively, the Economy Ministry said.

June’s figures mean Brazil’s trade surplus in the first six month of this year totaled $27.13 billion, down 9.6% from $30.02 billion in the January-June period last year.

Last week, Brazil’s central bank slashed its 2019 economic growth outlook to 0.8% from 2.0%. Among the main reasons for the revision was forecasts for export growth cut to 1.5% from 3.9%, meaning net trade will be a 0.3% drag on GDP growth this year.

Earlier on Monday, IHS Markit’s purchasing managers index (PMI) data for June showed that manufacturing growth picked up in June but exports in the sector contracted at their fastest pace in 2-1/2 years.

According to the Economy Ministry data, Brazil exported $18.05 billion of goods in June, down 0.8% from a year earlier on a working day average, and imported $13.03 billion, up 0.5%. Exports of manufactured goods fell 7.2% to $6 billion.

Reporting by Isabel Versiani; Writing by Jamie McGeever; editing by Richard Chang and Jonathan Oatis