International Trade: On the Path to Recovery

The prediction that Brazil’s share in global trade in 2021 could fall below 1% due to the impact of the Coronavirus pandemic seems increasingly distant. In the latest report from the World Trade Organization (WTO) in 2020, already due to the decrease in trade flow, Brazil accounted for only 1% of global exports and imports, maintaining its position as the 27th in the world trade ranking. In the first six months of 2021, mainly due to the growth in exports in segments such as agriculture, ferrous scrap, and iron ore, the trade balance recorded a surplus of $37.5 billion, an increase of $15.2 billion compared to the same period in 2020. However, this result should be viewed with caution because in the previous period, the Coronavirus pandemic had a greater impact on Brazil than the global average, with trade decreasing by 8.2%, according to the WTO survey, while the worldwide decline was 7.6%. According to data from the National Confederation of Industry (CNI), the contraction in Brazil’s trade flow in 2020 resulted from a 7% drop in exports and a 10% drop in imports. This year, the rise in international commodity prices, primary products with prices set on foreign exchanges, and the exchange rate contributed to more significant numbers being achieved so far. In the first six months of 2021, iron and copper ores saw an increase of 172.1% and 82.6% in exports, respectively. Coffee, soy complex products, sugar, oil, and steel products also recorded significant figures. The growth rates of Brazilian foreign trade were even more pronounced in June when exports exceeded imports by $10.37 billion, the highest monthly surplus in 2021. In other words, exports of $28.1 billion were up 60.8% compared to the same month in 2020, and expenditures abroad of $17.73 billion increased by 61.5%. As a result, the Ministry of Economy has already projected a surplus of $105.3 billion in 2021, a 106% increase compared to 2020. It’s worth noting that the previous estimate was a surplus of $89.4 billion. However, for 2021, the WTO predicts a decline of between 13% and 32% in global trade volume, ensuring that it will be more pronounced than during the 2008-2009 financial crisis. Last year, among G20 members, a group composed of the finance ministers and central bank governors of the world’s 19 largest economies plus the European Union, global trade decreased by 8% compared to 2019. In fact, only China recorded growth in trade flow in 2020, with a 4% increase in exports and a 1% increase in imports. As a result, it reached a trade flow of $4.6 trillion, increasing its share in global trade from 12% to 13%, securing its leadership in the ranking ahead of the United States, Germany, and Japan.

To improve the country’s position, it is clear that the Brazilian government has no choice but to advance structural reforms, especially in the area of logistics infrastructure, as evidenced by the recent decision of the government to increase the budget of the Ministry of Infrastructure by R$1 billion to meet the demand for the 17 projects initiated, resumed, or authorized in the first semester. At the same time, measures promoting streamlining, tariff reduction, improved financing, and the closure of trade agreements to reduce barriers to Brazilian products abroad are necessary.

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Liana Lourenço Martinelli, lawyer, postgraduate in Business Management and International Trade, is the Institutional Relations Manager of the Fiorde Group, composed of the companies Fiorde International Logistics, FTA Transport, and Warehouses, and Barter International Trade. Email: fiorde@fiorde.com.br. Website: www.fiorde.com.br

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