Brazil’s exports to the Asian region are increasing, and surpasses Germany thanks to an upcoming trade agreement.
Brazil is gradually learning about commerce in Asia outside of China. Brazilian newspaper Folha reports, in the first half of 2023, exports to the ASEAN nations of Brunei, Cambodia, the Philippines, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, and Vietnam were US$12.1 billion, up from US$4.5 billion during the same time in 2018.
It is also important to compare between nations. In the first half of 2023, sales to Singapore, the hub of ASEAN (Association of Southeast Asian Nations), were US$4.4 billion (up from US$1.1 billion in 2018). They were US$ 2.9 billion for Germany, the heart of the EU, down from US$ 2.5 billion in 2018.
Tatiana Prazeres, secretary of foreign trade at the Brazil’s Ministry of Development, Industry, Commerce and Services, asserts that it is crucial to understand Asia outside of China.
China outperforms other markets that are becoming more and more important to Brazil and the rest of the globe when we look at Asia as a whole, according to the report.
China accounted for 70% of Brazilian exports to Asia up to 2021, taking the first semesters into account, he said. It was significantly lower in the first semesters of 2022 and 2023, at 65.9% and 67.9%, respectively, with faster growth in Singapore, Thailand, and Indonesia than in China.
The export of a specific product, “bunker,” which is fuel oil for ships, helps to explain the situation in Singapore in part. With more than 130,000 ships entering and departing it annually, it is the biggest supply port in the world, and a new standard ended up favoring Brazilian petroleum.
However, during the first half of this year, sales of “bunker” actually decreased in value while those of crude oil, meats, machinery and equipment, coffee, iron ore, and steel products increased.
According to Prazeres, it is impossible to determine what proportion of sales are used in Singapore. Because of the nation’s advantageous location, the port may serve as a distribution hub for the area, unloading commodities from ships and sending them on to other locations around Asia.
She emphasizes that talks for a trade deal between Singapore and Mercosur are already underway. It would be a means to increase Brazil’s influence in this fast-paced region, she claims. “More Brazilian businesses must consider Asia in their plans,”
Former Secretary of Foreign Trade at the Ministry of Economy (2019–20), economist Marcos Troyjo believes that geopolitical and economic changes like the rise in per capita GDP in high-population Asian nations like Indonesia, as well as India and China itself, “are creating enormous opportunities for Brazil.”
Troyjo emphasizes that more than 35% of Brazil’s GDP was tied to international commerce in the previous year. In addition to geopolitical upheavals, he continues, “the redirection of global value chains” also creates a “excellent” outlook for the Brazilian economy in light of potential trade agreements and the acceleration of reforms.
However, he cautions that “these great prospects may be threatened if an undesirable combination of reform stagnation and hasty policymaking for the upcoming electoral cycles occurs.”
Infrastructure deficiencies in Brazil are no longer only a domestic problem, Troyjo adds, “in a global context where food and energy security have become paramount.” Rather, they have now become a global one.
Trade with Europe develops more slowly than it does with Asean and Asia as a whole, as seen by the disparity between exports to Singapore and Germany, which Troyjo underlined.
According to Prazeres, “the EU has a mature economy, so imports from the bloc are not expected to show great growth,” but the market is still very important despite its lack of dynamism.
He makes note of the increase in Brazilian crude oil exports last year, which may have been impacted by the conflict, and predicts that the Brazil-EU trade deal would boost commerce by making sales more competitive and encouraging partnerships and investments between the two areas.
Professor at the OP Jindal Global University in India and economist from the Center for China and Globalization in Beijing, Karin Costa Vazquez, argues that “Asian markets are expanding,” explaining the contrast with Europe, and foresees future issues, with or without the Brazil EU agreement.
She makes reference to the tariff that was adopted in May by the European Parliament and that would go into force in three years, stating that the CBAM (system for reducing carbon emissions at the border) “could be a major obstacle for Brazil and the EU.”
She has argued that the new Brazilian administration expands the scope of mutually agreed-upon preferences and pushes Mercosur closer to Asean, particularly Indonesia and Vietnam, as well as other Asian superpowers like India.