Letter IEDI n. 1143—Manufacturing exports expansion in early 2022
Although Brazilian manufacturing foreign trade balance was still in the red in Q1'22, as has been the rule since the 2008/2009 global crisis, there was a decline in the deficit (US$13.5 billion) in relation to the same period of the previous year (-5%), after a strong increase between Q2'21 and Q4'21.
This is because the sector's exports rose more than its imports again: +35.4% versus +22%, respectively. Today's Letter IEDI analyzes this recent development according to the level of technology intensity of manufacturing branches, divided into four groups, following the methodology used by the OECD: high, medium-high, medium and medium-low intensity.
Compared to the beginning of last year, the growth in manufacturing exports in Q1'22 meant an acceleration in relation to the result of the last quarter of 2021 (+25.7%), which was caused by more robust increases in the medium-low technology intensity group and a less significant drop in the high-tech industry.
Foreign sales of the medium-low category (+44.3%), in turn, were conditioned by an improvement in the results of almost all of its branches: food, beverages and tobacco; wood, paper and cellulose; metal and coke products and petroleum products. In high technology, the drop was lower due to higher exports from the pharmaceutical industry and a less pronounced decline in the aeronautical sector.
Even though it fell less, the participation of high technology in the external sales of the Brazilian manufacturing industry suffered another important drop. In Q1'22, its share was of a mere 2.9% of the total, the smallest figure since 1997 for the same period. It is worth remembering that the high intensity category accounted for about 15% of the industry's total exports in the first quarter of the years 2001 and 2002, that is, twenty years ago.
The medium-high range kept its growth pace and registered +29.6% against Q1'21. Three of its branches had stronger increases in their exports, among which stands out the sector of automotive vehicles, while three others advanced at a substantial pace, but lost strength: machinery and equipment, electrical appliances and materials, and chemical products. Other transport equipment was the only segment to show decline (-9.2%).
Exports of the medium technology intensity group decelerated more compared to late 2021. They registered +29.4% after +57% in Q4'21, always in relation to the same period of the previous year. Almost all of its branches contributed to this weaker evolution, especially metallurgy, non-metallic minerals and rubber and plastic.
As for the slowdown in imports, all industrial groups by technology intensity registered a loss of dynamism. The most acute case was that of medium technology, which was in the red (-2.2%), under the influence of rubber and plastic mainly. Medium-low technology grew (+20.1%) by half of what it had grown in the last quarter of 2021 (+44.3%), with drops in food, beverages and tobacco, and wood, paper and pulp. The coke and petroleum products branch also grew much less.
The higher technological intensity categories continued to expand their imports at a robust pace, but not without some accommodation. High technology, which in Q4'21 had registered +39.1%, recorded +30.9% in Q1'22, due to the slowdown in the pharmaceutical sector's foreign purchases.
In the medium-high range, there was a decrease from +40.9% in Q4'21 to +25% in Q1'22, always compared to the same period of the previous year. More modest growth rates were observed mainly in imports of vehicles, electrical appliances and materials and other transport equipment.