DON'T COUNT ON COFFEE TO SAVE BRAZIL FROM ITS RECESSION

Brazil is betting on exports to snap it out of recession. Don't count on it.

The largest economy in Latin America is mired in the deepest contraction in a quarter-century, saddled with spiralling prices and beset by a corruption scandal that had protesters pouring into the streets clamoring for President Dilma Rousseff's impeachment. The government just unveiled a fresh round of spending cuts and tax hikes to stave off further credit downgrades. 

The hope was that the real's 31 percent drop against the dollar this year would make Brazilian companies more competitive and deter the consumption of imports. Brazil is the world’s largest exporter of commodities including soy, beef, sugar and coffee, and also manufactures airplanes and cars.

But exports' share of the economy is little changed since 2011 and they account for just 11.5 percent of Brazil’s gross domestic product.

That percentage is about a third less than in Chile and Mexico, and half that of China and India.

Finance Minister Joaquim Levy's optimism about overseas trade is at odds with analysts who have actually cut their export forecasts for both 2016 and 2017.

"Even if you have very strong growth in the export sector, it’s going to give you little in terms of overall GDP growth," said Neil Shearing, chief emerging markets economist at Capital Economics. Any export improvement "won’t nearly be large enough to offset the impact of continued problems in the domestic economy."

source: Bloomberg