Brazil posted a higher-than-expected $4.9 billion trade surplus in May, official data showed on Monday, boosting exports to the European Union amid Russia's invasion of Ukraine. Economists polled by Reuters had forecast a $4.6 billion surplus. The result represented a sharp decline from the $8.5 billion surplus posted in May 2021, on the back of a surge in imports while exports grew at a slower pace. Exports were up 8% from the same month last year to $29.6 billion, a record for any month, the Economy Ministry said. Herlon Brandao, undersecretary for foreign trade intelligence and statistics, highlighted the 47.7% increase in exports to the European Union in May, mainly due to the increase in crude oil exports, which more than doubled. "We know that the European Union is a big buyer of oil from Russia. So it may be associated with a greater interest in Brazilian products as a substitute for imports from that origin," Brandao said. Overall, prices of exported goods grew by 21.9% while volumes fell by 7.9%. Brazil, a major seller of soy, iron ore and sugar, posted a decrease in exports of all these products in May.
Imports rose 33.5% to a monthly record of $24.7 billion, pushed by a 35.7% rise in prices, while volumes stood flat. Russia's invasion of Ukraine has prompted a commodity price shock that is pressuring global inflation. According to Brandao, higher prices act both ways but more on imports, especially with the increase in fuel purchased abroad. Year-to-date, the trade balance surplus totaled $25.1 billion, down from $26.6 billion in the same period in 2021. In April, the Economy Ministry said it was expecting a record trade surplus of $111.6 billion this year, but the projection will probably be reduced due to higher imports, Brandao said.