February 1, 2023
More than 50% of Brazil's exports are primary products |  Economie

More than 50% of Brazil’s exports are primary products | Economie

Brazilian exports are increasingly dependent on items such as soybeans, iron ore and oil. Today, basic products already account for more than half of the basket of everything the country sells abroad.

Between January and November this year, a survey conducted by the Center for Foreign Trade Studies (Funcex) showed that Exports of basic products accounted for 51% of the total.

Since at least 2010, this category of products has not been of much importance in the Brazilian export agenda. In 2020, for example, Basics finished the year with a 48% share.

Watch the evolution in the graph:

In absolute terms, Brazilian exports totaled R$256 million in the first 11 months of this year, while sales of core products reached R$131.4 million, according to Funcex.

There are two main factors that explain the dominance of core products on the export agenda:

  • Commodity prices are rising. With the recovery of the world economy after overcoming the worst phase of the epidemic, the prices of basic products rose, which boosted the value of exports;
  • a The industry is still showing difficulty in competing internationally, causing manufactured products to lose their share of the export basket during the past few years.

This year, international commodity prices helped the country this year due to the mismatch between global demand and supply, which contributed to an increase in the share of primary products in Brazil’s exports,” says Diane Santos, an economist at Funcex in charge of the survey.

In the case of industry, what impedes the improvement of exports is the so-called cost of Brazil – the old problems involving logistical costs, tax bureaucracy, for example, and the robbery of the national product’s competitiveness in competition with other countries. This year, the sale of manufactured products represents only 21% of the total.

“Manufactured exports are hampered by the famous Brazilian cost,” says Jose Augusto de Castro, president of the Brazilian External Trade Association (AEB). “Structural reforms are essential for Brazil to be able to reduce the cost of exports.”

And what do you expect from the future?

In 2022, commodity prices are supposed to fall given the global economy is on its way to growing less, but basic products will continue to dominate the country’s export agenda.

Among the main products sold by Brazil, the Association for Foreign Trade (AEB) estimates that export earnings from iron ore and crude oil should show a decline of 33.7% (to $29.7 billion) and 19,7% (to $23.4 billion), on the straight.

Cereals from soybeans are expected to grow 18% to US$45 billion.

“The trend is falling commodity prices around the world and this directly affects Brazil,” Castro says.

With core products declining, AEB estimates that exports for next year should reach $262.379 billion, down 4.7% from expectations for this year ($275.316 billion).

According to the association, the balance should increase from 57.222 billion dollars to 34.524 billion dollars.

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