A few days ago it became known that in the month of December, the indicator of industrial production in Brazil suffered the worst fall since it was created in 1991 to record a contraction of 12.4%. It took by surprise the market expected a drop of 6.6 per cent. With the deterioration in economic growth the Brazilian currency weakens in the short term. You might think that the strong weakening of the real could improve the Brazilian trade balance but this is not the case. In the month of January of this year, the Brazilian economy experienced its first trade deficit since 2001, product of the sharp contraction in exports. The commercial red amounted to US $518 million (at December 2008, the trade balance in Brazil had registered a surplus of $2,301 m).

In Argentina there was fear about the effect of the exchange rate weakening in Brazil about the outcome of trade balance. Argentina drags over 60 months of deficit of trade balance continued with Brazil. But despite the weakening of the Brazilian currency in January, the trade deficit for Argentina with Brazil It fell significantly and was the youngest of five years and a half to reach a negative value of US $88 million. The weakening of the real rather than benefits to the economy of Brazil, can generate problems on the inflation front which would put in an uncomfortable situation at the Central Bank of Brazil on the decision about the direction of its interest-rate policy. Although during the month of January, the rate of retail inflation is accelerated, it responded to an increase in seasonal food prices and an adjustment in prices for public transportation and not an acceleration product of the transfer of the weakening of the real on domestic prices. For the moment, inflation expectations remain anchored, and from the Brazilian market expected an inflation rate for this year of 4.3%.