China gives Brazilian trade balance surplus of US$ 23.3 billion, but aid will run out of steam, says FGV

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Sales of Brazilian products to China represented a surplus of US$ 23.3 billion for Brazil from January to August this year. However, Chinese purchases should not boost the performance of the trade balance in the same way next year, according to the Foreign Trade Indicator (Icomex) of the Getulio Vargas Foundation (FGV).

“In the year 2023, total Brazilian exports will face a more unfavorable scenario than that of 2022. Furthermore, unlike other times of global recession, China will probably not play a powerful countercyclical role to boost Brazilian exports”, he pointed out. FGV, in the Icomex note. “The generation of trade surpluses continues to depend on the Asian market and, in particular, on China,” he added.

From January to August 2022, the Brazilian trade balance with Asia totaled US$ 34.2 billion, including US$ 23.3 billion in trade with China. The remaining US$ 10.9 billion of trade with other Asian countries was greater than the balance with South America, of US$ 9.7 billion, and with the European Union, of US$ 5.2 billion.

The United States is Brazil’s second main trading partner, but it caused a deficit of US$ 10.5 billion in trade with the country. Brazilian exchanges with other North American countries had a positive balance of US$ 1.1 billion.

The second largest deficit in Brazilian foreign trade was with the Eurasian Economic Union (Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan), where Russia contributed a deficit of US$ 4.6 billion, the second largest bilateral deficit in Brazil, after the USA.

“Geopolitical disputes influence the direction of trade flows and, in this scenario, Brazil’s best position is to maintain, if possible, a neutral stance. Regardless of positive or negative effects, however, disputes generate uncertainty and make foreign trade operators more cautious. In addition to these issues, the macroeconomic scenario is unfavorable. High interest rates in the US and the European Union, the energy crisis that affects Europe, the slowdown in China’s growth and bottlenecks still existing in supply chains point to lower growth in world trade.

The Brazilian trade balance accumulated from January to August was US$ 43.9 billion, compared to a surplus of US$ 52 billion in the same period in 2021.

“The lower surplus in 2022 is explained by the lower variation in the value of exports, compared to the result of 2021”, justified the FGV.

From January to August, export prices grew 17.4% compared to the same period of the previous year, while the volume expanded by 1.3%. Import prices rose 28.1% from January to August, while volume increased 3.0%.

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