A survey from the Foreign Trade Association of Brazil (AEB) that came out today, August 1, shows that trade between Brazil and the rest of South America will improve again after the COVID-19 pandemic ends in 2021. This is according to Agencia Brasil.
The study says that the pandemic in 2020 brought the total export earnings for 2019 down from $28.8 billion to $22.6 billion. When the health crisis got better the next year, exports went back up to $33.9 billion. This recovery will last until 2022, when the South American country is expected to earn $41 billion from its exports.
Commodities
Contrary to what happens with Brazil’s exports to the rest of the world, which are mostly raw materials, most of Brazil’s sales to South America are made goods with higher added value. Most imports, on the other hand, are raw materials and products that haven’t been changed much.
“South America is where we sell the things we make. Europe and the US do buy goods made in Brazil, but not very much. Asia does not buy anything”, Castro stated. He said this is because South American countries sell raw materials to Brazil and buy goods made in Brazil. Our country is no different from the rest because it sells raw materials and buys finished goods from other countries.
The executive president of AEB said that Brazil’s exports are growing because the prices of commodities are still high around the world. “This gives these South American countries more money and more money to spend on imports. This gives these countries more money from imports and lets them buy more goods from a third country. And because Brazil is closest, its logistics, road transport, and container costs are all lower. So they end up buying from Brazil, which is closer than Europe and the US.”
The numbers show that Brazil has a trade surplus with all South American countries except Paraguay and Bolivia. This is because Paraguay imports electricity and Bolivia imports natural gas. Castro went on to say that Europeans, Asians, and even Americans are better at negotiating prices than Brazil is for South America because of this.
Brazil’s main exports to South America are: cars (11%) and auto parts (9.6%) to Argentina; fertilisers (5%), agricultural machines (4.6%), and cars (3.7%) to Paraguay; cars (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 (16%) to Peru; and cars (16%) to Chile.
On the other hand, Brazil’s top imports from the region are pickup trucks (20%), cars (12%), wheat (12%), and 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; and natural gas (88%) from Brazil.
