Sales from Brazil to South America increased by 64.7%

With the recovery of the global economy after the impact of Covid-19, Brazil’s trade balance with its neighbors in South America rose 64.7% to 7.3 billion USD in 2021 and is expected to reach a new peak this year.

In the first semester, the balance with South American neighbors was a surplus of US$ 6.2 billion, which was close to the full value of last year, according to a survey by the Brazilian Foreign Trade Association (AEB) based on data from the federation. Govt.. The surplus is expected to rise this year.

Last year, Brazil exported US$33.9 billion to South American countries, and sales could reach US$41 billion by 2022, AEB projected. If the value is confirmed, it will represent a growth of 21% compared to 2021. Half, 20.3 billion US dollars.

Jose Augusto de Castro, Executive Chairman of AEB, sees the growth of the trade surplus with neighboring countries as an opportunity for the national industry. The issue will be one of the topics of discussion at the 41st edition of the National Conference on Foreign Trade (Enaex) organized by the company and scheduled in virtual form in November.

“Brazil imports 85% of its transformation industry. In contrast, in exports, the main product is ‘products’, but the South American market includes other products,” says Castro.

Exports to South America are mainly made up of manufactured goods – automobiles, machinery and equipment, and food products. Imports are concentrated in raw materials – wheat from Argentina, copper from Chile, electricity from Paraguay (due to Itaipu’s bi-national hydroelectric plant) and natural gas from Bolivia.

Global recession

According to Castro, the surplus will be higher than in 2021 because there will be some stability in imports, expected accommodation or lower prices of raw materials such as wheat and copper. Recession, global.

So far, the state of the global economy amid imbalances caused by the pandemic and bolstered by the war in Ukraine has favored trade with South America. Like Brazil, neighboring countries primarily export raw materials, whose prices have risen since mid-2020, despite volatility. With more foreign exchange due to good export prices, these neighboring countries were able to buy more manufactured goods that Brazil exported.

At the same time, logistical disruptions in international trade have driven up freight costs worldwide. As a result, geographic proximity gave Brazilian industry a competitive edge as a supplier of manufactured goods to South American markets. “Brazil may be more in South America because of its geographical proximity, cheap logistics, availability to export by road and sometimes by rail to some countries,” says Castro.

A favorable situation cannot be taken for granted, thinks the president of AEB. “We can’t forget that other countries are moving on,” says Castro. “China has already overtaken Brazil as Argentina’s main supplier. In Chile, it’s the same thing. China is much more in Chile than Brazil, and it’s always been a captive market for Brazil,” he says.