Brazil Exports More Raw Materials Than Ever — and Imports More Industry Than It Can Afford

Brazil closed 2025 with a paradox that tells more about its economy than any single GDP figure could. The country’s overall trade balance posted a healthy $68.3 billion surplus, powered by record shipments of soybeans, iron ore, beef, and crude oil. But hidden beneath that headline number lies a different story: the manufacturing sector ran a $71.1 billion deficit, the deepest since records began in 1997.

The data, compiled by IEDI, the Institute for Industrial Development Studies, reveals that industrial imports grew at more than double the rate of exports — 8.6% versus 3.8%. Even excluding $5.3 billion in extraordinary oil platform purchases that distorted the figures, the deficit still surpasses the previous worst marks of 2013 and 2014. This is not a blip. It is the continuation of a structural shift that began in 2010, when Brazil’s manufacturing sector flipped from surplus to permanent deficit.

Planes Brazil can’t sell, pills it can’t make

The damage is concentrated at the top of the technology ladder. High-tech industries posted a $50.6 billion deficit in 2025, up from $27.1 billion in 2019. Two sectors account for the bulk of the deterioration: aerospace and pharmaceuticals, both reshaped by the pandemic and its aftermath in ways that left Brazil further behind.

Aerospace tells a particularly painful story. From 1999 to 2018, the sector contributed surplus after surplus to Brazil’s trade balance, driven by Embraer‘s competitive position in regional jets. That run ended in 2019. By 2025, imports had reached $15.3 billion — up from $6.4 billion six years earlier — while exports recovered to only $5.5 billion, roughly where they were before the pandemic. The result: a $9.9 billion deficit in a sector that once symbolized Brazilian industrial ambition. Decarbonization pressures, including mandates for sustainable aviation fuel starting in 2027, are adding both financial and technological burdens.

Pharmaceuticals show a similar pattern with a different catalyst. The sector’s deficit doubled to $15 billion from $7 billion in 2019, with imports reaching $16.4 billion. The pandemic accelerated a global innovation cycle in which China and India consolidated production of key active ingredients while Western companies poured billions into next-generation therapies. Brazil fell further behind. The explosive demand for GLP-1 weight-loss drugs — the injectable pens known colloquially as “canetinhas” — epitomizes the gap: Brazilians are among the world’s most enthusiastic buyers, but the drugs are almost entirely imported. Novo Nordisk has announced a $1.09 billion factory expansion in Minas Gerais, and Ozempic’s patent expires in Brazil in March 2026, which should bring cheaper generics. For now, each pen sold deepens the deficit.

China fills the gap that high interest rates created

In the medium-high technology bracket, the picture is no better. A deficit of $82.4 billion was driven by chemicals and machinery imports, the latter squeezed by Brazil’s high interest rates that have discouraged domestic investment. Chinese manufacturers have been steadily gaining market share in segments where Brazilian firms once held their own — a dynamic IEDI’s chief economist, Rafael Cagnin, traces to the 2008 global crisis, when trade barriers in the US and Europe first redirected Chinese exports toward Latin America. Trump’s tariffs are reinforcing that pattern rather than creating a new one.

The only real source of manufacturing surplus remains the lowest-tech segment — processed foods, beverages, and tobacco — which generated $60 billion in positive trade. But even that pillar showed cracks in 2025, with exports declining 1% and imports rising 1.7%. It was the only technology bracket where exports actually fell last year.

Two numbers, one economy

What emerges from these figures is a country getting richer from what it digs out of the ground and grows in its fields, but steadily losing the capacity to make the sophisticated goods its own economy demands. The $68.3 billion overall surplus and the $71.1 billion manufacturing deficit are not contradictions — they are two sides of the same coin, describing an economy drifting toward a commodity dependency that no amount of soybeans can reverse.

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