São Paulo – Brazil grossed US$ 13.405 billion in exports to Arab countries last year, down 4.5% from 2013, according to data from the Brazilian Ministry of Development, Industry and Foreign Trade (MDIC) compiled by the Arab Brazilian Chamber of Commerce. Nonetheless, sales declined by a lower rate than total exports from Brazil, which were down 7%.
Conversely, Brazilian imports of Arab products amounted to US$ 11.427 billion last year, up 0.24% from 2013. The Arab Chamber’s CEO, Michel Alaby, stressed that as a consequence, Brazil had a surplus of close to US$ 2 billion in trade with countries in the Middle East and North Africa.
Although the surplus is not as large as in 2013, the executive remarked that overall, the Brazilian trade balance ran a US$ 3.93 billion deficit in 2014 – the first deficit since the year 2000.
Export revenues dropped, but the sales volume to Arab countries was up 3% in 2014, therefore goods were shipped at lower prices, particularly commodities. “Virtually all commodity prices have dropped,” Alaby said.
Specifically, there was a decline in revenues from sales of sugar, poultry, iron ore and maize – some of the leading export products from Brazil to Arab countries. In turn, revenues from soy and beef exports increased significantly.
According to Alaby, soy exports to the region were a record, and for beef, unlike other staple foods, prices went up due to stronger demand from Russia. Beef exports to the Middle East and North Africa increased in volume and revenues, despite the ongoing ban on Brazilian product in Saudi Arabia, Qatar, Kuwait, Bahrain and Lebanon.
Other highlights include sales of dairy products, which fetched US$ 82.7 million last year, three times as much as in 2013; rice, which grossed US$ 22.7 million in 2014, and next to nothing in 2013; chemicals and related products, at US$ 544 million, up 118% from 2013; vehicles, including tractors, at US$ 256 million, up 226%; and aircraft, at US$ 226.7 million in 2014, whereas only spare parts were sold in 2013.
As commodity prices dropped and sales of terrestrial vehicles and aircraft went up, the share of industrial goods in Brazilian trade with Arab countries increased. Revenues were down 13.45% for basic goods and 4.22% for semi-finished goods, but up 22.84% for finished goods.
Other items that showed significant increase in exports to Arabs in 2014 were steel pipes and fuel and lubricants for aircraft in the onboard consumption type. This last group reflects the rise in number of direct flights between Brazil and Arab countries, air routes currently occupied by the companies Royal Air Maroc, Etihad Airways, Emirates Airline and Qatar Airways.
Among the destinations, the United Arab Emirates came on top in 2014, with imports from Brazil amounting to US$ 2.847 billion, a 10% increase over 2013. Saudi Arabia dropped from a 2013 first place to second in 2014, with purchases of US$ 2.542 billion, a 10% drop. Egypt shows up in third place with purchases that amounted to US$ 2.315 billion, a 5% increase. Argelia, Oman and Morocco follows.
On the other hand, there was an increase in imports by Brazil in fertilizers, chemical products, plastics, naphtha and diesel fuel. Purchases of raw oil, however, dropped.
Saudi Arabia maintained its position as Brazil’s main supplier among Arabs, with deals around US$ 3.3 billion, a 3.3% increase over 2013; followed by Algeria, with US$ 2.92 billion, a 5% drop using the same comparison; followed by Morocco, Kuwait, Iraq and Qatar.
Scenario
Alaby emphasized that the devaluation of the real against the dollar could step up the competitiveness of Brazilian’s products in Arab markets in 2015, specially manufactured, contributing for the increase in revenues.
At the other end, however, there is the matter of dropping oil prices, which could, in theory, reduce the power to import of countries producers of the commodity. Alaby assesses, however, that this shouldn’t affect the trade of essential supplies such as food items, which account for a significant part of Brazil’s sales to Arabs. “What tend to drop are imports of superfluous products”, he added.
The executive notes that the Gulf’s major oil producing and exporting countries hold vast reserves in strong currency, as well as sovereign funds, which can ensure imports and investment. However, the scenario changes from country to country, and in theory, Saudi Arabia is one of the ones that are least at risk, given the size of its oil output and low extraction costs.
The Arab countries that are oil importers and significantly engage in trade with Brazil, like Egypt and Morocco, plummeting oil prices can free up cash for the importation of additional goods.
*Translated by Gabriel Pomerancblum & Sérgio Kakitani
