Brazilian economy's balance of trade in goods registered a surplus of US$62 billion in 2022, 1.5% higher than in 2021. Although positive, this performance represented a loss of pace compared to the previous result. This Letter IEDI analyzes the evolution of our exports and imports over the past year, with an emphasis on the trade flows of the manufacturing industry, being updated quarterly from now on.

In 2022, the lower growth in the surplus of Brazilian trade balance in goods was due to the higher rate of expansion of imports (24.3%) versus exports (19.3%) in relation to the previous year. In the same comparison, exports registered a slight acceleration (21.0%) in Q4'22, while imports decelerated (6.8%).

China remained the main destination for our foreign sales, but its share fell from 31.3% in 2021 to 26.8% in 2022. Brazil's exports to China varied +2.1% last year, the lowest growth rate among our top 15 markets. Second, the US was the destination for 11.2% of our exports in 2022. Despite the slowdown in US GDP, our foreign sales to this country advanced 20.2%. 

An interaction of factors explains the results of 2022. From abroad, the war in Ukraine, China's “zero COVID” policy and rising interest rates in most advanced and emerging economies have contributed to the slowdown in global GDP and trade. This had a negative impact on Brazilian exports. 

However, the rise in commodity prices has greatly offset such effects, although it has also boosted the value of our imports, especially of petroleum products and some agricultural and metallic products. So much so that in quantum—that is, in quantity—our exports grew 4.8% in 2022 (four times less than in value) and our imports, 2.6% (almost ten times less than in value).

On the domestic side, the loss of pace of Brazilian GDP cooled down the demand for imported goods. Regarding the exchange rate, the effects are more ambiguous. On the one hand, in 2021 the Real depreciated 3.2% in real effective terms, which may have had an impact (positive on exports and negative on imports) in 2022, since contracts are usually signed six or even 12 months in advance. On the other hand, the Real appreciated 11.4% in real terms in 2022.

Sectorally, it was agriculture that drove the expansion of our exports. It was also in this sector that the price effect resulting from the rise in commodities was more expressive. In 2022, the value of agriculture's external sales rose 36.6% compared to 2021, but in quantity the increase was much smaller, of only 1.5%. External sales of the extractive industry fell 4.7% in value, under the influence of the decline in metal commodity prices from May'22, and registered -0.8% in quantity.

Exports from manufacturing were not far behind and registered an increase of 26.3%, reaching a record value of US$182 billion. The sector continued to account for most of our exports: almost 55% of the country's total foreign sales at the end of 2022. Like agriculture, some industrial branches' results were also due to a price effect, notably the activities at the beginning of production chains. In quantum, they registered +8.7% compared to 2021.

The increase in the value exported by the manufacturing industry was quite widespread among its branches. Of a total of 23 branches, 21 expanded their foreign sales in 2022 in relation to the previous year. The best results were due to the “manufacture of coke and refined petroleum products” (+78.7%) and “tobacco products” (+69%), benefiting from a positive and expressive price effect. This effect was also the predominant one in foreign sales of the “food products” branch (+30.6%), which registered the fourth highest rise in the industry.

The third and fifth industrial branches whose exports increased the most in 2022 comprise activities that do not produce commodity derivatives: “automobiles, trailers and semi-trailers” (33.6%) and “chemicals” (30.7%). In both cases, the quantum effect predominated over the price effect.

As for imports, those of the manufacturing industry totaled US$242.6 billion in 2022, an increase of 22.9% compared to the previous year. Although they grew less than exports, it was enough to widen the sector's deficit to $60.5 billion (+13.5%). The price effect on industrial imports was also stronger, given that in quantum terms they varied only +2.7%.

In the case of agricultural imports, whose value rose 6.3%, the increase in prices is the explanation for this movement, since its quantum fell 8.3%. In the case of the extractive sector, in turn, external purchases rose 69.8% in value, due to energy commodities, and 18.2% in quantity.

The full text is available in Portuguese.