Foreign Trade: China and commodities lead increase in Brazilian exports
Three results stood out in the behavior of the 2018 balance of trade, according to FGV’s Brazilian Institute of Economics (IBRE): China’s leadership; the growth of commodities; and the platform effect. The balance of trade recoded a surplus of USD 58.7 billion. The result is inferior to that of 2017 – USD 67 billion –, but the second highest amount in the historical series. China reached its largest share as the destination of Brazilian exports – 26.8% –, which resulted in a difference of more than 10 percentage points compared to the second partner – the United States –, which buys 12% of Brazil’s foreign sales. The third main partner, Argentina, had its share reduced from 8.1% down to 6.2% between 2017 and 2018.
China’s share has surpassed that of Brazil’s main partner countries/blocks since 2014. The increase in the share between 2017 and 2018 (from 21.8% up to 26.8%) is significant and explained by an increase of 35.2% driven by the three main commodities exported to this country. Soybeans, crude oil and iron ore account for 82% of Brazilian exports to China, and the share of each product is 43%, 22% and 17%, respectively. Oil surpassed the share of iron ore for the first time in Brazilian foreign sales to China.
The importance of China for Brazilian exports is reasserted when we analyze the 10 main products exported by Brazil. The second main product exported by Brazil is crude oil, and China’s share in the total exports rose from 44.2% to 57% between 2017 and 2018. In regard to beef exports, the eighth main product, China’s share climbed from 18.3% in 2017 to 27.2% in 2018. China is not among the top ten export markets for soybean meal, oil platforms and raw cane sugar. China appears in fifth place with a share of 5% for “other manufactured products”, the tenth main export item.
It appears that with these results, basic products accounted for 50% of the total exported by the country in 2018.
In the case of imports, China is the main market of origin, but the difference from second place is less than in the case of exports. China accounted for 19.2% and the United States for 18.1% of Brazil’s total imports in 2018. It should be noted that the 20.2% increase in total imports between 2017 and 2018 was influenced by the changes in REPETRO, analyzed in ICOMEX reports throughout 2018 (see the December ICOMEX report). If we exclude the platforms, the variation in the imported value falls to 13.8%.
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