Brazil's trade surplus reached US$ 5.4 billion in February
Driven by shipments of iron ore, oil, and soybeans, Brazil's exports to China jumped 49.1% in the first two months of 2024 compared to the same period in 2023. Trade with the Chinese accounted for 43% of the $11.9 billion surplus recorded by Brazil's trade balance in the first two months of this year, according to the Foreign Trade Indicator (Icomex) released on Wednesday (20) by the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre/FGV).
According to the FGV, the result highlights the national dependence on Chinese purchases, as well as an export agenda focused on commodities.
Brazil's trade surplus reached US$ 5.4 billion in February, a record for the month within the historical series of the survey. "We started the year with favorable results, but there are doubts that this path of record results can be consolidated. Projections indicate balances around US$ 80 billion," says the Icomex report, which points out two issues on the radar for Brazil's balance. The first is about China's growth, which may fall below the 5% projected by the country's government, thus affecting Brazilian exports' growth.
The second, as Icomex data illustrate, is the reaffirmation of the concentration of exports in commodities and the Chinese market.
"In addition, the highlight of the extractive industry in the first two months of 2024, led by oil, may play a more relevant role than agriculture," it concludes.
In the export agenda to China, oil accounts for 25% of Brazilian sales, iron ore has a share of 25% as well, while soybeans concentrate 22%.
"An index of concentration of 72% in three products. In the first two months, China's share of Brazilian exports was 29.1%, with a 47% increase in export value [49.1% increase in volume]. The balance was US$ 5.2 billion, 43% of Brazil's total surplus," highlighted the FGV.
As for Brazil's other main trading partners, exports to the United States grew 21.5% in the first two months, in volume, and increased 20.5% to Asia (excluding China and the Middle East).
"For the second-largest market, the United States [12.1% share], the export agenda is more diversified, but oil is the main product, with a 15% share, followed by iron and steel semi-manufactures, 9.7%," pointed out the FGV.
For the European Union, Brazilian sales fell 3.7% in the first two months of 2024 compared to the same period in 2023.
Exports to Argentina plummeted 28.7%, amid the economic crisis in the neighboring country.
For the other countries in South America, there was a 6.1% decrease in exported volume in the first two months of this year compared to the same period last year.
"With the European Union and Argentina, we lost in exports and imports. The 28.7% drop in Brazilian exports to Argentina, concentrated in the automotive sector, affects the industry's performance in foreign trade because in the short term, there is no market that could replace Argentina's," concluded the Icomex report.
In the first two months of 2024 compared to the same period in 2023, in values, Brazilian exports grew 17.4%, while imports rose 1%. Volumes increased, but prices decreased.
In volume, exports grew 20.2%, and imports increased by 11.4%. Regarding prices, there was a decrease of 2.3% for exports and a reduction of 9.2% for imports.
Considering the category of use of imports, there was an increase in the volume imported by the manufacturing industry, both for capital goods (up 12.2% in the first two months) and for intermediate goods (an increase of 12.7%). The movement signals investments in production.
"The increase in imports by the manufacturing industry suggests growth in activity levels. At the same time, the price drop, as some sectors of intermediate goods have highlighted, the deflation led by Chinese imports would harm domestic production. An issue that may gain relevance in the domestic debate on trade policy, increasing the case for investigations into dumping against China and/or demands for protectionist measures," concluded the Icomex.
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