China contributed USD 33.6 billion to the Brazilian trade surplus last year, which totalled USD 50.9 billion, according to the Foreign Trade Bulletin (Icomex) released by the Brazilian Institute of Economics of Getulio Vargas Foundation (FVG/ Ibre).
In a year marked by an economic crisis motivated by the pandemic that will have led to a 4.7% drop in Brazil´s Gross Domestic Product, Icomex points to the trade surplus as the only positive result last year. The favorable balance of imports and exports contributed to the decrease in the current account deficit at a time of retraction of capital inflows in the country.
While trade with China was favorable to Brazil at 33.6 billion, the balance was negative with the United States, and was positive with the European Union at USD 1.5 billion.
The fall in imports, driven by the recession in the level of activity, influenced the trade balance surplus, as well as the increase in exports of commodities to China, which reduced the fall in foreign sales in a year of strong retraction in world demand, says Icomex.
Commodities, according to Ibre, represent 66% of the value exported in 2020, which is the highest percentage of the historical series started in 1998, when it was 40%. From 2019 to 2020, the value of exports of commodities, such as agricultural or mineral products, grew 0.5%, while that of the remaining products decreased 18.5%.
With a volume increase of 7.4%, the agricultural sector led Brazilian exports in 2020, due to the increase in the volume of exports to China (17%). The weight of the Asian country rose from 28.1% to 32.3% from 2019 to 2020. Other Asian countries also had a positive contribution of 11.1%, and explain 14.9% of Brazilian exports.
The bulletin indicates that the uncertainties related to the pandemic have not yet disappeared from the world and Brazilian outlook, but that there are positive indications for Brazilian exports. The first is linked to the rise in commodity prices, which started to be observed in the second half of 2020 and was reflected in the improvement in terms of trade, starting in July 2020.
“Chinese investments were made in the iron ore and copper sectors. In addition, the prices of some foods, such as soy, meat, and wheat, increased with retractions in supply due to droughts and the effects that still endured from the pork crisis in China”, says the report.
“The increase in commodity prices is good news for Brazil. The improvement in terms of trade associated with commodity prices helps Brazilian manufacturing exports to South American commodity exporting partners. However, for Brazil to remain one of the leaders in the sale of commodities, especially agricultural, the government must prioritize its environmental and climate policy ”, recommends Ibre.
Photo: Rio de Janeiro, Brasil
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