Brazil–South America trade sees quick recovery, study finds

A survey released today (Aug 1) by the Foreign Trade Association of Brazil (AEB) shows a resumption in positive trade results between Brazil and the rest of South America from 2021 onward, following with the easing of the COVID-19 pandemic.

The study reports that the accumulated results in 2019—$27.8 billion in export revenues—were brought down by the pandemic in 2020 to $22.6 billion. Following the easing of the health crisis the next year, export revenues rebounded to $33.9 billion. This recovery continues into 2022, with projected export revenues for the country in South America standing at $41 billion.

Commodities

Contrary to what occurs with Brazilian exports to the world, led as they are by commodities, Brazil’s sales to South America consist mostly of manufactured products, with higher added value. Among imports, however, commodities and products with little processing are predominant.

“Our market for manufactured goods is South America. Europe and the US do buy manufactured goods [from Brazil], but very little. Asia does not buy anything,” Castro said. This is the case, he argued, because South American nations export commodities and buy manufactured goods from Brazil. Our country is no exception to the rule, as it exports commodities and buys manufactured goods from the foreign market.

The executive-president of AEB noted that Brazilian exports are growing because commodity prices are still high globally. “This generates more capital for these South American countries and more purchasing power for imports. This increases import revenues for these countries and makes room for importing more products from a third country. And as Brazil is the closest, it has lower logistics costs, road transport, and containers. So they end up buying from Brazil, which is closer than Europe and the US are.”

With the exception of Paraguay, due to electricity imports, and Bolivia, with natural gas imports, the figures show that Brazil boasts a trade surplus with all other South American nations. The negotiation power of Europeans, Asians, and even Americans, Castro went on, makes product prices higher than those practiced by Brazil for South America.

The chief goods exported by Brazil to South America are: automobiles (11%) and auto parts (9.6%) to Argentina; fertilizers (5%), agricultural machines (4.6%), and automobiles (3.7%) to Paraguay; automobiles (8.2%), pick-up trucks (6%), beef (4.9%), and pork (4.5%) to Uruguay; oil (28%) to Chile; iron bars (10%) to Bolivia; oil (23%) to Peru; cars (16%) to Colombia; cars (9.1%), laminated products (6.9%), and polymers (5.1%) to Ecuador; and sugar (18%), vegetable fats and oils (17%), and edible products (11%) to Venezuela.

Conversely, the top products purchased by Brazil from the region are: pickup trucks (20%), automobiles (12%), wheat (12%), electric energy (8.9%) from Argentina; electric energy (32%) and soybeans (11%) from Paraguay; pickup trucks (11%), cereals (10%), plastic articles (9.6%), and electric energy (9%) from Uruguay; copper (44%) and whole fish (13%) from Chile; natural gas (88%) from Bolivia; copper (35%) and other minerals (19%) from Peru; coal (31%), coke (18%), and polymers (16%) from Colombia; lead (31%) from Ecuador; alcohols and phenols (45%) and fertilizers (31%) from Venezuela.