Brazil ends 2021 with largest trade surplus in historical series

RIO DE JANEIRO, BRAZIL – The Foreign Trade Indicator (Icomex), released yesterday (14) by the Getulio Vargas Foundation (FGV), indicates that the Brazilian trade balance recorded last year the largest surplus in the historical series, amounting to US$61.2 billion, US$10.8 billion more than the balance of 2020.

The trade flow, which adds up exports plus imports, reached a record of US$ 500 billion, as a result of the increase of 34.2% in exports and 38.2% in imports in 2021, compared to the previous year.

According to FGV, the price variation increased exports, which rose 29.3%, while the volume increased only 3.2%. As for imports, the volume grew 21.9% and prices increased 13.1%.

The exports of commodities (agricultural and mineral products traded in the foreign market) had a 67.7% participation in total exports, showing an expansion of 37.3% in value.

The prices had an increase of 38.9%, against a decrease in volume of 1.8%. Exports of non-commodities grew 28.1%, as a result of the increase in prices (12.4%) and volume (13.5%).

Likewise, commodity imports increased their share in the export mix from 7% to 8.5%, from 2020 to 2021. This increase was associated with a 69.5% variation in value, with a 36.4% increase in prices and a 23% increase in volume.

In the case of non-commodities, which accounted for 91.5% of Brazil’s foreign purchases, the variation in value was 35.8%, with an increase in volume of 22% and in prices of 11.1%.

According to the FGV’s Icomex, a new wave of increase in the prices of commodities in the international market is not expected, although this year shows a scenario of uncertainties due to the effects of drought and rain in some crops, the slower pace of growth in China and a possible intensification of the use of subsidies in some countries, such as the United States, in relation to the beef market.

The exchange rate variation in an election year is also a concern in the domestic sphere.

INDUSTRY

By type of industry, Brazilian foreign trade registered an increase, in value, of 62.7% in the exports of the extractive industry, explained by the increase in prices (59.7%) and volume (1.3%).

The industry’s share in total exports rose from 23% to 28% from 2020 to 2021. Iron ore and crude oil concentrated 94% of the total foreign sales of the sector last year. The two products had variations, in value, of 73% and 55.3%, respectively.

Icomex indicates that the second-largest variation in value was in the transformation industry (26%), with a 51% share in total national exports in 2021, showing a drop of 4 percentage points in relation to 2020.

The price index increased 17.8% and the volume index 6.5%, between 2020 and 2021. FGV pointed out that the industry’s exports are more diversified than those of agriculture and cattle-raising and the extractive industry.

The ten main products sold on the international market accounted for 46% of the sector’s foreign sales and were mostly products that can be classified as commodities.

On the other hand, agriculture and cattle-raising showed an expansion of 23.6% in value and 27.2% in prices, with a decrease of 1.8% in volume. Its participation was 20% of the total Brazilian exports.

Soy led the way, accounting for 70% of the sector’s sales and showing an increase of 35.3% in value, followed by coffee, with a 10.5% share and an increase of 16.7%.

On the imports side, the ten main products make up 36% of the foreign purchases and the three – fertilizers, fuel oils and medicines – were responsible for 16.7%.

The transformation industry participated with 91.5% of imports and registered an increase of 34.6% in value, 11.7% in prices, and 20.3% in volume, between 2020 and 2021. The extractive industry participated with 6% in total imports, with increases of 89.8% in value, 43.2% in volume, and 31.6% in prices.

The main imported products were liquefied natural gas (LNG) and crude oil. The highlight was the 298% increase in value of gas imports, the result of a 108% variation in price and 91% variation in volume.

Agriculture and cattle-raising had a weight of 2.5% in total imports, with positive variations of 30.7% (value), 22% (prices) and 7.2% (volume). The main imported product was wheat, with a 31% share and a 24.3% growth.FGV’s Icomex shows that there were no changes in the composition of the Brazilian export mix. The agricultural and extractive sectors registered positive balances of US$ 46.6 billion and US$ 62.8 billion, respectively, while the transformation industry had a negative balance of US$ 45.3 billion. “The dependence on primary commodities in the generation of surpluses makes foreign trade more subject to price fluctuations,” analyzes the document.

DESTINATIONS

China continues to lead Brazilian exports and imports. Although its share in exports has dropped from 32.4% to 31.3% in 2021 compared to 2020, exports to the Chinese market increased by 29.4%.

Imports also grew in value (45.2%), with price increases of 9.9% and 22.5% in volume. The surplus rose from US$ 33 billion to US$ 40.1 billion.

On the other hand, the trade deficit with the United States, Brazil’s second largest partner, grew from US$ 6.4 billion to US$ 8.3 billion. For Argentina, the US$591 million surplus recorded in 2020 gave way to a deficit, in 2021, of US$69.9 million.

Icomex also points out that, driven by China, Asia has confirmed its leadership in Brazilian foreign trade. The participation of the region in the country’s exports, without China, reached 15.1%, surpassing that of the European Union (13%). In imports, the share was 12.2%, lower than the 17.4% share of the European Union.