Dec 7, 2011

Brazil: Commodities Prices and Internacional Crisis

The Brazilian commodities index was released today. This index expresses the commodities prices in BRL more relevant to the dynamics of inflation in Brazil. In November, this index fell 1.7% compared to October and increased 6.1% compared to November 2010. If we consider the average rate in 2011, the index is 24.6% higher than the average of 2010. The chart below also shows the index of terms of trade of Brazilian foreign trade, which also are at high levels.

Opinion: Up to third quarter of 2011, we can´t see the impact of the crisis of Europe in the prices of products exported by Brazil, despite the stability of GDP. This impact had been beginning to be felt only in October, with decrease of the index commodities for two consecutive months, and should impact more strongly to GDP in the 4th quarter. In other words, Brazil's economic growth should be weak in the fourth quarter, and if the trend of falling commodity prices persists, the economic growth in 2012 will be harmed.

Source: Funcex and Central Bank of Brazil

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