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Brazil asserts itself as the main export destination

Brazil asserts itself as the main export destination

The foreign sales of goods In April they rose 27% year-on-year and accumulated an increase of 5% in the first quarter, measured in dollars, totaling 3,848 million dollars. But it is not the only data highlighted in the reports released this week by both Uruguay XXI as for the Exporters Union. It’s been several months since Brazil is establishing itself as the main destination for exports of the Uruguay, moving from first place to China.

In fact, the northern neighbor is the destination of 21% of the exports of the Uruguay while China accounts for only 12%. It is possible that this last percentage is somewhat higher given that there is a lot of merchandise that leaves free trade zones destined for China (for example, grains) and the country destination is not recorded. But even so, the Asian giant has come second.

This is because sales to China have had decreases in their prices as is particularly what happens in the meat sector. After several years in which Chinese demand for Uruguayan beef was overwhelming, the Asians have reduced their demand, not so much in volumes – which are still important – but in prices. The same thing happened with several grains and they have also stopped buying dairy products, at least in the last year. At the same time, China is the destination of a good part of the production of cellulose (it also leaves from free zones), but Uruguayan production goes mainly to Europe. Contrary, Brazil has established itself as a demander of several products of the Uruguay.

What does Brazil buy from Uruguay?

Northern purchases are mainly vegetables, barley malt and dairy. In the first case, there is an increase in purchases of almost 70% in the last year, while purchases of barley malt (to make beer for the gigantic Brazilian market) rose 15% (always measured in dollars). The dairy purchases They have fallen a little more than 30% so far this year, mainly due to lower prices; Volumes drop, but more moderately. They are also placed in Brazil other foods and manufacturing products, such as plastics.

Even with this good export dynamic, the trade balance with Brazil It was negative by about 700 million dollars in 2023. It is possible that – in part – this is due to some special circumstance, such as the drought that reduced grain exports. At the same time, Uruguay buys from Brazil a very diverse range of merchandise, from processed foods to machinery of various types, including vehicles and industrial manufactures. The exchange in services is also intense, where tourism stands out among others.

Perspectives

Surely Brazil remain as main export destination, at least in the coming months. The chinese demand remains relatively weak, due to the problems inherent to the Asian economy.

Brazil, For its part, it is stabilizing its macro situation after the shocks of the pandemic and the political vicissitudes. However, a factor that Uruguay has to constantly monitor is the exchange rate: to maintain a fluid trade, it is necessary that the exchange rate remain relatively competitive.

So much Uruguay as Brazil they should have given the monetary battle against inflation, raising the interest rate, which appreciated its currencies. But in that process, the Uruguayan Peso It was appreciated more and today it is at its highest level for many years with Real (graph). This can complicate trading.

Exchange rate Uruguay Brazil.jpg

At the same time, Brazil places obstacles unforeseen impacts on certain Uruguayan exports, such as rice and – more recently – dairy products. Although they are partners in the Mercosur, certain internal complaints from Brazilian producers lead to non-tariff barriers, which Uruguay has denounced again and again. Even so, neighbors are a key market and – given the increase in household income that has occurred in recent times – it will surely continue to be so.

Source: Ambito

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