Brazil loses US$56.2 bi in South American trade over last 10 years

According to a survey by the National Confederation of Industry (CNI), decreased participation in regional trade in the last decade has caused Brazil to lose US$ 56.2 billion in exports to other South American countries over 10 years. Brazil’s share of neighboring countries’ imports (Brazil’s exports to neighboring countries) fell from 14.5% in 2010 to 10.7% in 2019. Likewise, South American countries also lowered their exports to Brazil from 10.5% in 2010 to 7.5% in 2019.

According to the CNI, the shrinking of bilateral trade mainly harms the industrial sector. This is because South America is the leading destination for sales of Brazilian manufactured goods, importing 38% of Brazil’s industrial exports. From another perspective, manufactured products count for 82% of Brazil’s total exports to South American countries.

The main reason for the retraction in Brazilian exports to South America was the drop in trade with Argentina following its successive economic and exchange rate crises in recent years. Of the total loss of US$ 56.2 billion, US$ 39.2 billion (69.8%) was lost in trade to Argentina. Brazil also stopped exporting US$ 5.9 billion of products (10.5%) to Peru, US$ 5.3 billion of products  (9.4%) to Colombia, and US$ 2.4 billion of products to Chile (4, 3%).

Brazil’s trade with South America has shrunk while other countries have filled in the void; from 2010 to 2019, South American imports rose 12.9%, mainly arriving from China, the United States, and the European Union.

Forecast

To arrive at the US $ 56.2 billion trade loss calculation, CNI estimated the value that Brazil would have exported if it had maintained the 14.5% share of imports from South American countries recorded in 2010. China had the highest percentage; the Asian country’s share of imports from South American countries increased from 15% to 20.8% in the analyzed period. The United States also increased its participation in South American imports. This percentage went from 17.5% to 19.5% in the analyzed period. The European Union grew more slowly, from 12.3% to 13.6%.

Comparing by sectors, the sector ‘machines and apparatus and electrical or mechanical materials’ accounted for 37% of the value that Brazil stopped exporting to South America, with a reduction of US $ 12.5 billion or US$ 8.1 billion over the decade. Other industrial sectors recorded substantial losses, such as automobiles (US$ -4.8 billion), aircraft (US$ -3.2 billion),  and organic chemicals (US$ -2.5 billion).

Sources: Comex do Brasil and CNI

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