RIO DE JANEIRO, BRAZIL – Between January and November this year, a survey conducted by the Fundação Centro de Estudos do Comércio Exterior (Funcex) shows that exports of basic products reached 51% of the total.
Brazilian exports are increasingly dependent on soybeans, iron ore, and oil items. Today, basic products already represent more than half of everything the country sells abroad.
Since 2010, this class of products had not had such a significant relevance in the Brazilian export agenda. In 2020, for example, essential products ended the year with a share of 48%.
In absolute values, total Brazilian exports amounted to R$ 256 million in the first 11 months of this year, while sales of primary products reached R$ 131.4 million, according to Funcex.
Two main factors explain the dominance of essential products in the export plan:
-The price of commodities is on the rise. With the recovery of the world economy after overcoming the worst phase of the pandemic, commodity prices soared, which boosted the value of exports.
-Industry continues to show difficulty competing internationally, causing manufactured products to lose participation in the export list over recent years.
This year, the country had the help of international commodity prices due to the mismatch between global demand and supply, which contributed to increase the participation of essential products in Brazil’s exports,” says Daiane Santos, an economist at Funcex and responsible for the survey.
In the case of industry, what continues to hold back the improvement in exports is the so-called “Brazil cost” – old problems that involve logistics costs and tax bureaucracy,and take away the competitiveness of national products in competition with other countries. This year, the sale of manufactured products represents only 21% of the total.
“Exports of manufactured goods are hindered by the famous Brazil cost,” says José Augusto de Castro, president of the Brazilian Foreign Trade Association (AEB). “The structuring reforms are fundamental for Brazil to reduce the cost of exports.”
And what to expect in the future?
In 2022, commodity prices should cool down in the face of a global economy that is growing less, but essential products will still dominate the country’s export agenda.
Of the main products sold by Brazil, the Foreign Trade Association (AEB) estimates that export revenues from iron ore and crude oil will drop by 33.7% (to US$ 29.7 billion) and 19.7% (to US$ 23.4 billion), respectively. Soybeans, on the other hand, are expected to grow by 18%, to US$ 45 billion.
“The trend is for commodity prices to fall worldwide, and this directly affects Brazil,” says Castro.
With the drop in primary products, AEB estimates that exports next year will total US$262.379 billion, a decrease of 4.7% in relation to the forecast for this year (US$275.316 billion). The surplus should fall from US$57.222 billion to US$34.524 billion, predicted the association.