AEB projects a drop in exports and balance surplus in 2022

Commodity price drop should affect results, says executive

Published in 08/12/2021 - 14:29 By Alana Gandra – Repórter da Agência Brasil - Rio de Janeiro

Brazilian exports are expected to reach US$ 262.379 billion next year, which will represent a drop of 4.7% compared to the US$ 275.316 billion estimated for 2021. Imports, however, may grow by 4.5% compared to US$ 218.094 billion projected for this year, reaching US$ 227.855 billion. The forecast, released today (8) by the Brazilian Foreign Trade Association (AEB) for the trade balance next year, indicates that the surplus could reach US$ 34.524 billion, down 39.7% from the US$ 57.222 billion estimated for 2021.

According to the AEB, the increase in imports and the fall in exports will cause a negative contribution from foreign trade in the calculation of the Gross Domestic Product (GDP, sum of all goods and services produced in the country) in 2022.

In addition to the uncertain internal scenario with the upcoming elections, the main factor affecting the Brazilian trade balance will be commodities (primary products with international prices), whose prices are very high, but without support for this, said the executive president of the AEB , José Augusto de Castro, to Agência Brasil . “ Commodity prices are likely to fall in 2022,” he said.

Oil and iron ore prices, for example, are already falling, and the projection is that, next year, they will decrease by 18.5% and 34.1%, respectively. As for soybeans, whose price is forecast to increase around 11.8% in 2022, Castro warned that "the trend is for something to fall." Together, soy, oil and iron ore should account for 37.5% of total exports, which means a retraction compared to the estimate for 2021 (40.7%). According to the AEB, soybeans should be the leading national product in the export basket, with US$ 45 billion, which will represent a new record.

Imports

Imports, on the other hand, continue to grow, due to the lack of components, containers and ships, which forces companies to buy abroad. As a result, many products have had a significant increase in prices and quantum (quantity) in imports. One of them is natural gas, which increased 98% in quantity and 88% in price. Fertilizers (22% in volume and 48% in price) and medicines (15% in quantity and 52% in price) also had significant increases.

For José Augusto de Castro, the exchange rate will have no effect on the trade balance, because the country has already got used to it at a high level. "Theoretically, it would have some effect on the export of manufactured goods, but, in practice, we see that the Brazil cost is very high, and the exchange rate is not enough to offset this factor."

In imports, where the high exchange rate could act as a barrier, Castro explained that, without the production of various goods in the domestic market, "companies are forced to import or close".

Commodity hostage

Brazil remains hostage to commodities , said Castro, noting that the country's 15 main export products are commodities . For the executive president of the AEB, it will still take a long time for manufactured products to take the lead in Brazilian foreign trade. "Without reforms, it is unable to export manufactured goods", emphasized Castro. He highlighted the need for tax reform, saying that without it, the country will continue to export tax costs. “This makes exports unfeasible. In the short term, I can't see anything for the export of manufactured goods”.

Castro recalled that, in 2000, 59% of Brazil's exports were manufactured products, with greater added value, and that today there are only 26%. “This difference means jobs that are no longer generated internally and an increase in imports. Because when we stop producing here, it starts to matter.”

Text translated using artificial intelligence.

Edition: Nádia Franco

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