Letter IEDI n. 1076—The Trade Balance by Technology Intensity in Early 2021
The year 2021 started with a trade surplus of US$ 7.9 billion in the first quarter, exceeding the positive results of the beginning of previous years. However, this figure was less than half of the surpluses obtained in mid-2020, due to the recovery of our imports observed with the recent reactivation of the economy after the COVID-19 shock. Exports, in turn, also grew.
This Letter IEDI analyzes the performance of the manufacturing industry's trade balance, with its branches aggregated by technological intensity, following the OECD methodology. In Q1/20, the improvement in the balance as a whole was accompanied by stabilization of the industry's deficit and increase in the surplus of the primary sectors of the economy.
In the case of manufacturing goods, the deficit was of US$ 14.4 billion, about the same level registered in Q1/20, but the highest since 2015 for a first quarter. It was also much higher than the figures seen in the second half of last year, under the effect of COVID-19.
This result was due to a 3.6% increase in imports in relation to the same period of the previous year, reaching US$ 43.2 billion in Q1/21, and a rise of 5.1% in manufacturing exports, totaling US$ 28.8 billion. The highlights in exports were the medium and medium-high technology industry and in imports, the medium-high and high technology intensity ranges.
The group of manufacturing branches classified as medium-high technology was the one with the strongest revival of its foreign commercial relations. Its exports grew 8.2% in Q1/21, after eleven consecutive quarters of decline in the year-on-year comparison, driven mainly by the chemical, machinery and equipment, and vehicles sectors. Imports increased 9.5% due to chemical products, electrical machinery and equipment, and vehicles.
The group of medium technology intensity saw the highest increase in exports: 12.1% in relation to Q1/20, driven by a 12.5% expansion in the metallurgy industry. In contrast, its imports remained in the red, registering -7.3%, under the influence of the shipbuilding sector, which includes oil platforms, whose trade flows remain under the impact of accounting changes. Without this sector, imports of the medium technology group would have registered +37.2%.
With foreign sales also on the rise was the medium-low technology intensity industry: 2.0% in Q1/21, after recording growth of 4.1% in Q4/20 compared to the same period of the previous year. The main positive influence came from exports of food products. As for its imports, there was a fall of 1.6%, a level much lower than in the previous quarters, due to the rise in food products and to less acute falls in fabrics and clothing, and in fuels.
Finally, the high-tech industry had an unfavorable performance: drop in exports and rise in imports. Its foreign sales shrank 1.4%, the tenth consecutive quarter in the red. The negative influences came from aircraft and pharmaceutical exports. Its imports, in turn, grew 2.6% compared to Q1/20, due to the electronics and also to the pharmaceutical industry.
With these results, the deficit of the higher technology intensity ranges increased: +3.2% in the case of high technology, reaching US$ 7.99 billion in Q1/21, and +10.1% in the case of medium- high, totaling US$ 13.98 billion. The less technologically intensive categories were in surplus: US$ 6.63 billion in the medium-low, up +6.5% in relation to Q1/20, and US$ 981 million in the medium technology range, reversing the deficit seen early in the previous year.