Pace of Brazilian exports in 2023 contingent on China, says FGV Ibre

The year started with a positive outlook for Brazilian exports, though the international arena remains frail, whether in the geopolitical field, with a possible intensification of tensions between China and the United States, or surprises regarding the Chinese economy, says the report released by the Brazilian Institute of Economics of the Getutlio Vargas Foundation (FGV Ibre), with data from the Foreign Trade Indicator (Icomex).

At first glance, the report says, it seems that there will be growth in Brazilian exports in 2023 compared to 2022. However, the performance of Brazilian exports to China will be crucial for the increase in Brazilian exports in 2023.

The January trade balance surplus was US$ 2.6 billion, close to the highest value on record for January since 1998, which was US$ 2.7 billion in 2006.

In January of this year, the value of exports increased by 16.4%, while imports increased by 2.9%. The variation in export volume was positive by 9.7%, while the import volume decreased by 4.9%. Export prices increased by 5.8%, while import prices increased by 8.3%.

January’s trade balance does not allow for conclusions about future developments, highlights Ibre. The projections of the International Monetary Fund (IMF) for 2023 point to a slowdown in the growth of the world economy and of the major economies, except China, the report details.

“The question is whether a possible increase in exports to China will be sufficient to offset the decline in exports to other markets such as the United States, Argentina, and the European Union,” says FGV Ibre.

Please find below a chart that compares container exports from Brazil to China and the other way around, from Jan 2019 to Dec 2022, according to data from the DataLiner service.

Brazil-China exports and imports | Jan 2019 – Dec 2022 | TEUs

Source: DataLiner (click here to request a demo)

The International Monetary Fund (IMF) forecasted a slowdown in global economic growth in 2023 in the world’s major economies, including the United States, Germany, and Japan, around October 2022, according to the publication. The only exception was China, where the projected growth rate increased from 3.2% to 4.4% in 2023.

“However, the persistence of the lockdown policy raised concerns about whether this prediction would be true.” The IMF revised its projections for 2023 in January, with an upward bias in global and major economic growth rates, but still lower than in 2022. China remains the outlier, with a 5.2% increase in 2023.

The end of the lockdown policy in December last year influenced this result and, at the same time, increased the probability for this result to occur, points out FGV Ibre.

Source: Valor Econômico

To read the original reporting, access: https://valor.globo.com/brasil/noticia/2023/02/17/china-deve-determinar-ritmo-de-exportao-brasileira-em-2023-diz-fgv-ibre.ghtml

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