Brazil crisis may wipe out trade deficit with U.S.
Reuters, Thursday, January 21, 1999 at 22:39
WASHINGTON, Jan 21 (Reuters) - The Brazilian currency
crisis will hurt U.S. trade with Brazil and may even wipe out a
healthy U.S. surplus with Latin America's largest economy, a
senior U.S. trade official said on Thursday.
"We have been running a surplus with Brazil that will,
logically, be reduced and may even be eliminated, though it's
too early to say where things will settle," Deputy U.S. Trade
Representative Richard Fisher said.
"We are watching very carefully," Fisher told reporters,
noting that Brazil's purchasing power has slumped more than 25
percent since last week's shock devaluation.
Department of Commerce trade figures for November released
on Thursday showed that the United States' accumulated trade
surplus with Brazil in the first 11 months of this year fell by
$1.1 billion compared to the same period in 1997.
The data showed that world financial turmoil has shrunk the
U.S. trade surplus with South America, the only major region of
the world where the United States sells more than it buys.
"We are not happy to see depressed prospects in Latin
America," Fisher said after addressing the Brazil-U.S. Business
Council on the impact of Brazil's currency crisis.
"That is one reason we are eager for Brazil to work out the
current situation," he said.
Fisher said private economists keep raising projections of
the United States' enormous trade deficit worldwide because of
the implosion of demand for U.S. goods and services in Asia,
with Japan's recession at the "heart of the problem."
The Department of Commerce said the U.S. trade deficit with
Latin America, excluding NAFTA-partner Mexico, fell to $851
million in November from $1.2 billion in October, and compared
to $1.67 billion a year earlier.
Latin America is the market for one fifth of U.S. exports,
and sales to the region have been growing faster than in any
other region, though recent financial turmoil is likely to
change that.
The U.S. trade surplus with Brasil fell to $490 million in
November from $617 million in October and $763 million a year
earlier, the Department of Commerce said.
In the first 11 months of 1998, the United States exported
$713 million less to Brazil than in the same period of 1997,
lowering the accumulated surplus to $4.5 billion from $5.6
billion the previous year.
Meanwhile, Brazilian exports to the United States have
remained level and could increase with the great competitive
edge the devaluation will give Brazilian exporters.
Copyright 1999, Reuters News Service
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