AEB projects drop in Brazil’s exports and balance of trade surplus in 2022

RIO DE JANEIRO, BRAZIL – Brazilian exports should reach US$262.379 billion next year, which represents a drop of 4.7% in relation to the US$275.316 billion estimated for 2021. Imports, however, may grow 4.5% from the US$218.094 billion projected for this year, reaching US$227.855 billion.

The forecast, released today (8) by the Foreign Trade Association of Brazil (AEB) for the trade balance next year, indicates that the surplus may reach US$34.524 billion, a fall of 39.7% compared to the US$57.222 billion estimated for 2021.

According to AEB, the increase in imports and the drop in exports will cause a negative contribution of foreign trade in calculating the Gross Domestic Product (GDP) in 2022.

Besides the internal scenario of uncertainty with the proximity of the elections, the main factor to affect the Brazilian trade balance will be commodities (primary products with an international quotation), whose prices are very high, but should not be, said the AEB’s executive president, José Augusto de Castro, to Agência Brasil. “The prices of commodities should fall in 2022,” he said.

The prices of oil and iron ore, for example, are already falling, and the projection is that next year they will have a reduction of 18.5% and 34.1%, respectively. As for soybeans, whose price is forecast to increase by around 11.8% in 2022, Castro warned that “the tendency is for something to fall.”

Together, soy, oil, and iron ore should be responsible for 37.5% of total exports, which means a retraction compared to the estimate for 2021 (40.7%). According to AEB, soybeans should be the top national export product, with US$45 billion, which will represent a new record.

IMPORTS

Imports continue to grow next year due to the current lack of components, containers, and ships, forcing companies to buy abroad. With this, many products have had a significant price and quantity increases in imports.

One of them is natural gas, which increased 98% in quantity and 88% in price. Fertilizers (22% in volume and 48% in price) and medicines (15% in amount and 52% in price) also significantly increased.

For José Augusto de Castro, the exchange rate will not affect the trade balance because the country is already used to it at a high level. “Theoretically, it would have some effect on the export of manufactured goods, but in practice, we see that the cost of Brazil is very high, and the exchange rate is not enough to offset this factor.”

In imports, where the high exchange rate could work as a barrier factor, Castro explained that without producing several goods in the domestic market, “companies are forced to import or close down.”

HOSTAGE OF COMMODITIES

Brazil is still a hostage of commodities, said Castro, highlighting that the country’s 15 main export products are commodities. For the AEB executive president, it will still take a long time for manufactured goods to take the lead in Brazilian foreign trade.

“Without reforms, there are no conditions to export manufactured goods,” emphasized Castro. He stressed the need for tax reform, saying that the country will continue to export tax costs without it. “This makes exports unviable. I can’t see anything for the exportation of manufactured goods in the short term.”

In the year 2000, Castro recalled that 59% of Brazil’s exports were manufactured products of higher added value but that today they are only 26%. “This difference means jobs that are no longer generated domestically and an increase in imports. Because when we stop producing here, we start importing.”

With information from Agencia Brasil