Brazil-Portugal: Booming Trade

Data from the Ministry of Economy shows that trade between Brazil and Portugal is on the rise, despite the effects caused by the COVID-19 pandemic, having increased by 41.4% in the first half of this year compared to the same period in 2020.

The increase was driven by Brazilian exports of fuel oils and soybeans and Portuguese exports of olive oils and aircraft components, according to statistics gathered by the Federation of Portuguese Chambers of Commerce in Brazil. Transactions between Brazil and Portugal represented 0.78% of Brazilian international business last year. In this context, Brazil sells more than it buys. Since 2018, there has been an increase in exports to Portugal and a gradual reduction in Portuguese exports, but in the first quarter of 2021, the numbers were lower than those recorded in the same period in 2020. Despite this, the combined trade volumes between the two countries remain higher than those recorded in 2019.

Portugal ranks 32nd on the list of Brazil’s largest trading partners in terms of Brazilian exports volume. Meanwhile, Portugal ranks 39th in the list of supplier countries to Brazil. According to data from the Ministry of Economy, there were significant fluctuations in trade between 2014 and 2019. In 2019, the trade exchange was $1.92 billion, with exports amounting to $1.16 billion, representing a 19.9% decrease compared to 2018. Thus, Brazil became the 13th country of origin for Portugal’s imports and the 10th destination country for Portuguese exports.

Brazil’s exports are primarily related to the extractive sector, representing 62% of all products acquired by Portugal in the first quarter of this year. The composition of Portuguese imports from Brazil also includes industrial goods (19%) and agribusiness products (19%). Portuguese exports to Brazil are mainly industrial products. Brazil primarily sells mineral oils, while Portuguese exports to Brazil are led by vegetable oils. However, the volumes traded in the first quarter for these two items are significantly lower than those traded in the same period last year.

Positive highlights of the period include soybeans on the Brazilian side, which grew and represent almost 11% of Brazilian exports to Portugal. On the Portuguese side, beverages and seafood, which grew during the same period, are noteworthy. Brazil’s merchandise trade balance has been positive over the past five years, reaching 44.6 billion euros in 2020, with fluctuations in imports and exports from 2016 to 2019, registering a decline only in 2020. The pace of exports, which increased between 2016 and 2018, has slowed since then.

Today, Brazil is one of the main providers of raw materials and intermediate goods for the Portuguese industry. This changes the profile of Brazilian exports: products such as coffee, wood, sugar, leather, and cocoa, which were dominant in the past, are giving way to other commodities like oil, soy, iron ore, and corn. In smaller volumes, there are also sales of food, tropical fruits, furniture, electrical equipment, leather goods, and electronics.

It is worth noting the exchange in the aeronautical segment, where there are sales of complete aircraft and purchases by Brazilian firms of parts, accessories, and components. But it should be remembered that Embraer has had two component factories in Portugal since 2012: one in Évora, 135 kilometers from Lisbon, which produces metal parts and composite materials; and in Alverca, near Lisbon, it has controlled, with a 65% stake since 2004, Oficinas Gerais de Material Aeronáutico (OGMA), Portugal’s most traditional aeronautical company, founded in 1918.

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Liana Lourenço Martinelli, lawyer, postgraduate in Business Management and International Trade, is the Institutional Relations Manager of the Fiorde Group, comprised of Fiorde International Logistics, FTA Transport and Warehouses, and Barter International Trade.

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