BRAZIL’S ECONOMIC GROWTH AND TRADE: AN IN-DEPTH ANALYSIS

June 14, 2023
1:49 pm

Introduction

As a nation with significant economic potential, Brazil has established itself as a key player in global trade. With a diverse range of industries and products, Brazil’s global trade has been on the rise, making it an attractive investment destination. This comprehensive analysis will delve into Brazil’s economic growth, exports, imports, trading partners, and market opportunities to offer valuable insights into the South American giant’s role in the world economy.

Overview

By 2021, Brazil had become the 12th largest economy worldwide, based on GDP (current US$). Ranking 24th in total exports and 27th in total imports, it also held the 81st position for GDP per capita (current US$) and the 49th spot in terms of economic complexity (ECI). These statistics demonstrate Brazil’s immense potential in the global market and the opportunities it holds for businesses and investors alike.

Exports

Brazil’s top exports include iron ore ($46.2B), soybeans ($39B), crude petroleum ($30.7B), raw sugar ($10B), and poultry meat ($7.66B). The primary destinations for these exports are China ($88.3B), the United States ($30.2B), Argentina ($12B), the Netherlands ($9.29B), and Chile ($7.14B).

In 2021, Brazil emerged as the world’s leading exporter of soybeans ($39B), raw sugar ($10B), poultry meat ($7.66B), frozen bovine meat ($7.09B), and sulfate chemical wood pulp ($6.84B). Sources: The World Bank.

Export Specialization

Brazil has a high level of export specialization in soybeans (36.2), raw sugar (25.8), soybean meal (18.6), poultry meat (18.2), and pig iron (17.2). This specialization is measured using the Revealed Comparative Advantage (RCA) index, which calculates the ratio between Brazil’s observed and expected exports in each product category.

Export Opportunities

The relatedness index, which measures the distance between a country’s current exports and each product, reveals several export opportunities for Brazil. These include coal briquettes (0.24), sorghum (0.23), tin ores (0.22), uranium and thorium ore (0.22), and wool (0.21).

Imports

Brazil’s primary imports consist of refined petroleum ($13.1B), motor vehicles and their parts and accessories (8701 to 8705) ($7.58B), vaccines, blood, antisera, toxins, and cultures ($6.4B), mixed mineral or chemical fertilizers ($6.37B), and petroleum gas ($5.72B). The country’s main import sources are China ($53.8B), the United States ($39.3B), Germany ($12.4B), Argentina ($11.2B), and India ($6.77B).

In 2021, Brazil became the world’s largest importer of mixed mineral or chemical fertilizers ($6.37B), pesticides ($4.49B), nitrogenous fertilizers ($4.42B), potassic fertilizers ($4.1B), and phosphatic fertilizers ($1.06B).

Import Specialization

Brazil’s import specialization can be observed in several product categories, such as carboxyimide-function compounds (including saccharin and its salts) and imine-function compounds (1.31), pneumatic, hydraulic, or self-contained electric tools for working in the hand (1.29), nickel bars, rods, profiles, and wire (1.14), metal-rolling mills and rolls therefor (1.1), and construction machinery, including bulldozers, graders, levellers, scrapers, angledozers, mechanical shovels, excavators, shovel loaders, and tamping machines (1.1). These figures are derived from the product complexity index (PCI), which measures the knowledge intensity of a product based on the knowledge intensity of its exporters.

Services

In 2019, Brazil exported $33.8B worth of services. The top services exported included other business services ($15.8B), transportation ($5.56B), personal travel ($4.31B), computer and information services ($2.57B), and business travel ($1.68B).

Brazil imported $69B worth of services in 2019, with other business services ($24.5B), personal travel ($12.8B), transportation ($11.5B), computer and information services ($5.4B), and royalties and license fees ($5.25B) being the most significant categories.

Economic Complexity

Over the past 20 years, Brazil’s economic complexity has somewhat decreased, moving from the 24th to the 49th position in the ECI rank. This decline indicates that the country’s economy has become relatively less complex, which could be attributed to various factors, including changes in export patterns, government policies, and global market conditions.

Trade Balance

As of April 2023, Brazil reported a positive trade balance of $8.22B, with exports totaling $27.4B and imports amounting to $19.1B. Between April 2022 and April 2023, Brazil’s exports decreased by $-1.61B (-5.55%) from $29B to $27.4B, while imports declined by $-1.6B (-7.73%) from $20.7B to $19.1B.

Export Growth

The decrease in Brazil’s year-over-year exports in April 2023 can be primarily attributed to a reduction in exports to Spain ($-368M or -46.8%), the United States ($-366M or -12.5%), and Pakistan ($-229M or -87%). Product exports also experienced a decline in refined petroleum ($-591M or -47.9%), crude petroleum ($-445M or -14.7%), and frozen bovine meat ($-425M or -47.6%).

Import Growth

The decrease in Brazil’s year-over-year imports in April 2023 was mainly due to a reduction in imports from the United States ($-1.12B or -25.5%), Australia ($-174M or -68.2%), and Saudi Arabia ($-168M or -32.8%). Product imports also witnessed a decline in refined petroleum ($-1.18B or -52.1%), potassic fertilizers ($-368M or -42.3%), and nitrogenous fertilizers ($-177M or -42.6%).

Trading Partners

Brazil shares land borders with several countries, including Argentina, Bolivia, Paraguay, Peru, Suriname, Uruguay, and Venezuela. This geographical advantage has facilitated trade relationships with neighboring nations, further strengthening Brazil’s global trade network.

In April 2023, Brazil’s top export markets were China ($9.25B), the United States ($2.57B), Argentina ($1.66B), the Netherlands ($908M), and Mexico ($860M). The country’s main import sources during the same period were China ($3.88B), the United States ($3.26B), Germany ($947M), Argentina ($889M), and Russia ($719M).

Conclusion

Brazil’s global trade has experienced significant growth over the years, positioning the country as a vital player in the world economy. With a diverse range of industries and products, Brazil presents numerous opportunities for businesses and investors seeking to tap into its vast market potential. By understanding the intricacies of Brazil’s economic growth, exports, imports, trading partners, and market opportunities, stakeholders can make informed decisions and capitalize on the nation’s potential.