Forgot your password?

Choose a newsletter

Premium access provided by ENSTA

Your premium access provided by ENSTA

Enter your email to begin

Premium access granted to you by Expatica

You've been given FREE premium access to Worldcrunch

Enter your email to begin


By Reducing Surplus, Brazil Wants To Help Argentina Avoid Economic Meltdown

Folha d S. Paulo has uncovered documents showing that Brazil wants to give its struggling neighbor a break on trade deals. It's a sign of how deep are Brazilian fears about Argentina's economic health.

Article illustrative image Partner logo Argentina-Brazil border (seretide)

BRASÍLIA - Argentina is Brazil's third largest trade partner, but the neighboring country is currently facing capital flight, high inflation and a major slowdown of its industry. If the state of economy deteriorates further, some sectors, such as the automotive, textile and food industry, will suffer the consequences -- a situation Dilma Rousseff’s government wants to avoid at all costs.

Folha De S. Paulo has uncovered a decision -- not publicly divulged -- to reduce the Brazilian surplus from R$ 5.8 billion ($2.9 billion) in 2011 to R$ 4 billion ($2 billion). The Brazilian government has accepted the $1 billion reduction in bilateral trade surplus with Argentina to help its troubled neighbor, whose economic woes could potentially spread across the border.

A spokesperson for the Ministry of Development, Industry and Foreign Trade denies the report, but the offer has been presented to the Argentinean side and includes establishing extra-official quotas for Brazilian product exports.

As of today, several items sold to Argentina have trade tarrifs. Non-official quotas would free products from this obstacle, even restricting sales.

In Buenos Aires, the problems faced by President Cristina Kirchner are eroding her popularity. While in Brasília, the whistle had already been blown on secret messages sent by Brazilian diplomats, which Folha managed to obtain. In a cable sent last January, the Brazilian embassy in Buenos Aires warns that capital flight will continue until the end of 2012.

Dilma Rousseff is aware that the rise in currency rates in Argentina has resulted in a loss of competitivity, and diminished reserves.

Change of tone

Brazil's decision to reduce its surplus represents a new position in dealing with the Argentinean crisis. At the beginning of the year, ministries were considering retaliating against its neighbor. The change of tone reveals how worried the country is about its trade partner.

Although both economies are closely tied to each other, the Ministry of the Treasury does not think that a currency crisis would have dramatic consequences on Brazil. Tristán Rodríguez, economist at the Center for the Opening and Development of Latin America (CADAL), says the slowdown in Brazilian industry affects Argentina more than the other way around.  

Read the original article in Portuguese

Photo - seretide


Sign up for our weekly Global Biz & Innovation newsletter now

Be a part of the conversation. Click to show comments
About this article source Website:

Founded in 1921, the "Sao Paulo Gazzette" became Brazil's leading daily in the 1980s by applying standards of openness and objectivity to its coverage of the country and Latin America as a whole.

Worldcrunch brings top stories from the world's best news sources into English for the first time.

- Find out how we work
- Stay connected with our newsletter
- Try premium access for just $0.99

Want to get in touch or report a bug? Find us at

Load More Stories

Unlimited access to exclusive journalism, the best world news source across all your devices

Subscribe Now Photo of Worldcrunch on different devices

Your premium access to Worldcrunch is provided by

University of Central Lancashire

Please register to begin

By registering you agree to our terms of service and privacy policy.