Brazil’s trade deficit with the US shrinks 92% in 2023 amid steep decline in fuel imports
01/12/2024
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Abrão Neto — Foto: Divulgação
Trade between Brazil and the United States in 2023 saw a decline in export revenue and overall trade flow compared to 2022. However, exports of industrial goods reached a historic high of $29.9 billion in bilateral trade. The proportion of manufacturing goods in Brazil’s trade with the US increased from 78.8% in 2022 to 81% in 2023.
Last year, exports of industrial goods to the US grew by 1.2%, while Brazil’s total exports of these products declined by 2.3%. The United States remains the primary destination for Brazilian manufacturing goods exports, accounting for a 16.9% share. Such data was compiled by the American Chamber of Commerce in Brazil (Amcham Brasil) based on information from Brazil’s Department of Foreign Trade (Secex).
Abrão Neto, AmCham Brazil’s CEO, highlighted the diversity and high technological intensity of industrial goods exported to the US, including semi-finished iron or steel products, crude oil, aircraft, civil engineering equipment, and pig iron. These items were among the top five Brazilian exports to the US, according to Amcham’s survey.
The survey also revealed that the value of five of the top ten Brazilian products exported to the US increased in 2023. The US is the main market for seven of these top products. “Brazil’s trade portfolio with the US is highly diversified, solidifying its position as the leading market for Brazilian manufacturing goods exports,” stated Mr. Neto. He noted that semi-finished iron and steel products were the top exports to the US, driven by the robust performance of the US construction sector, which also spurred demand for engineering equipment like excavators and loaders.
Fabrizio Panzini, director of government relations at Amcham, mentioned that the top ten products shipped to the US represent approximately 54% of Brazil’s total exports to the country. This diversity contrasts with other destinations, such as China, where the top ten items sold constitute 93.3% of Brazilian exports.
Brazil’s trade balance with the US closed with a deficit of $1.1 billion in 2023, significantly lower than the $13.9 billion deficit in 2022, marking a 92% reduction. This decrease was due to a greater decline in imports than in exports. Brazilian export revenues to the US totaled $36.9 billion, a 1.5% decrease from 2022. Mr. Neto attributed this decline mainly to a 9% reduction in average prices despite a record 8.2% increase in exported volume.
Looking ahead to 2024, Mr. Neto anticipates international prices to stabilize and moderate growth in bilateral trade, both in exports and imports. This outlook considers expected economic growth in Brazil and the US, along with US industrial policies likely to stimulate industrial and construction activities. Additionally, the 200th anniversary of diplomatic relations between Brazil and the US in 2024, along with Brazil’s G20 presidency, may further enhance bilateral relations.
Mr. Neto emphasized the significance of Brazil-US trade, especially in industrial goods, in the context of Brazil’s industrial renewal and efforts to increase manufactured goods in exports and attract more productive investment. He noted the ongoing rivalry between the US and China, which, although recently stabilized, could influence Brazil-US relations. “The US’s search for diversified and reliable suppliers could present opportunities for Brazil,” he said.
Brazilian imports from the US dropped significantly in 2023, with a 26% decrease from the previous year, totaling $38 billion. Consequently, the total trade flow, combining exports and imports, fell by 15.7%. Mr. Neto pointed out that the reduction in imports was concentrated, with $12.3 billion of the $13.3 billion decrease coming from crude oil, fuels, and natural gas. He recalled that Brazilian natural gas imports had risen in 2021 and 2022 due to the water crisis and the activation of thermoelectric power generation. The decline in oil and fuel imports reflects price reductions and ongoing changes in international trade routes for these products due to the Russia-Ukraine war.
*Por Marta Watanabe — São Paulo
Source: Valor International