Brazil exports remain concentrated in commodities and imports in industrial goods, WTO report

Brazil’s integration into the global economy has grown in recent years, but exports are increasingly concentrated in commodities, and imports are dominated by industrial goods, according to the World Trade Organization (WTO) assessment of Brazilian trade policy.

WTO periodically examines the country’s policies, focusing not only on trade flows. This time, the international multilateral organization points out that the Brazilian economy has been in an opening process with the share of exports and imports of goods and services rising from 24.3% of the Gross Domestic Product (GDP) in 2017 to 39.2% in 2021.

Export sales are becoming increasingly concentrated in primary goods, such as plant-based products, live animals, and oil and mineral products. Between 2017 and 2021, the share of oil and minerals exports increased from 19.4% to 31.3%.

According to the WTO, Brazil remains an important player in world trade in certain agricultural commodities such as soy, beef, chicken meat, sugar, orange juice, and coffee. The agricultural sector’s share of gross value added in 2021 was 8.1%, up from 5.7% in 2017, and its share of employment was 9.7%.

Imports, on the other hand, continue to be dominated by industrial goods. The WTO notes that, although in decline, the Brazilian manufacturing sector remains relatively significant, representing 11.3% of gross value added in 2021. Since the beginning of the millennium Brazilian manufacturing has consistently lost competitiveness and has contracted.

Regarding the services sector, which is critical to global competitiveness in exports, accounts for the majority of gross added value (69.8% in 2021) and job creation in Brazil. “However, despite improvements in certain sectors, services always suffer from structural deficiencies that limit the economy’s overall growth potential,” the WTO underlines.

WTO also highlighted the growing importance of Brazil’s foreign trade, especially with China, and the relative decrease in the weight of the Americas. Goods trade with Mercosur partners also declined, especially in the case of exports.

Brazilian exports to China increased from 22.1% in 2017 to 31.3% last year. In the case of the US, in the same period they decreased from 12.6% to 11.2%. With the European Union, as a percentage of total exports they slid from 14.1% to 13.0%. On the other hand, the drop in Brazilian exports to Argentina was very sharp, from 8.2% to 4.2% in the period considered.

In turn, China accounted for 22.8% of all Brazilian imports in 2021, up from 17.5% in 2017. Purchases of products from the United States and Argentina remained relatively stable. They also fell in line with the EU (from 19.9% to 17.1%).

In the final balance WTO notes that Brazil continues to provide various “incentive” programs, i.e., subsidies. It includes subsidies subject to compliance with the base production process (PPB) criterion, established to use the maximum production capacities installed in the country.

Brazil is portrayed quite favorably in the report. And as in the past, it recommends moving forward with structural reforms to improve productivity in various areas, reforming the tax and subsidies regime, and reducing bureaucracy.

Source: MercoPress

To read the full original article, please go to: https://en.mercopress.com/2022/12/01/brazil-exports-remain-concentrated-in-commodities-and-imports-in-industrial-goods-wto-report

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