Brazil expected to see more strong foreign trade figures this year

Brazil is expected to continue to enjoy strong foreign trade figures in 2024, after seeing a record surplus last year. 

High and stable commodity prices, such as for iron ore, oil derivatives and agricultural products, are shielding Brazil’s balance of trade from global geopolitical tensions.

The country's trade surplus reached US$98.8bn last year, far exceeding the previous record of US$61.5bn set in 2022. Exports and imports both registered new records of US$340bn and US$241bn, respectively, according to the development, industry, trade and services ministry.

José Augusto de Castro, president of Brazilian exporters’ association AEB, speaks with BNamericas about the projections for foreign trade this year and related issues.

BNamericas: What is the projected scenario for Brazilian foreign trade in 2024?

Castro: In 2024, we're likely to have a very similar scenario in terms of values to what we had in 2023.

Exports are projected to be US$334.5bn in 2024, a small reduction compared to 2023, and imports should see a slight increase, reaching US$241.7bn. As a result, the trade balance in 2024 is forecast at US$92.7bn, lower than 2023 but still very robust.

BNamericas: What are the risks for these expectations?

Castro: I will confess to you that I’m a little surprised by the almost complete absence of any impact on Brazil's trade performance of geopolitical factors, which are increasing around the world, such as the polarization between China and the US and the war between Russia and Ukraine, among others.

Geopolitical factors would suggest a scenario of major trade instability for Brazil today, but this is not happening. 

Something tells me that we may see changes during the year that could impact the forecasts, but the problem is that it’s still not clear whether the changes will be positive or negative for trade.

BNamericas: Do you think the tension between Venezuela and Guyana is a potential risk to Brazil?

Castro: Despite being countries that border Brazil, they're small countries, without a big share of Brazilian trade, so the impact of tensions between these countries is quite limited for Brazil.

BNamericas: How about the impact of the new government in Argentina?

Castro: Argentina is an important topic for Brazil as the country is a major export destination for our manufactured products. 

It will be very good for Brazilian exports if the new president of Argentina [Javier Milei] manages to bring some economic stability to Argentina, but it’s still too early to analyze the practical results that we will have with this new administration in Argentina.

BNamericas: Brazil’s exports are highly dependent on commodities. Is the Brazilian government failing to pursue trade agreements that could boost exports of industrialized products?

Castro: I wouldn't say that's the Brazilian government's fault.

We also have to consider that advances in trade agreements experience internal resistance from some business sectors because Brazilian industry is currently very weak.

As we’re unable to offer competitive prices, this ends up hindering progress on international trade agreements. In fact, in general, we’re afraid of having broader trade agreements because of our lack of competitiveness.

BNamericas: Do you believe attempts to reach a trade agreement between Mercosur and the European Union have completely failed?

Castro: They haven’t completely failed yet, but we're going down that road.

The trade agreement with the European Union faces strong opposition within Europe and that makes it difficult to conclude negotiations.

BNamericas: Can the tax reform recently approved in Brazil and advocated by the industrial sector make Brazilian exports more competitive?

Castro: For now, tax reform is just an expectation as we still don't know what the real impact will be.

There is an expectation of reduced costs for companies and less bureaucracy related to taxes, but until we have all the points of the tax legislation regulated, with all the rates defined, we can't measure the impact.