Letter IEDI n. 1267—Improvement of manufacturing trade balance concentrated on medium-low technology
In the first quarter of 2024, manufacturing reduced its trade deficit, continuing the trajectory started at the end of 2022, after the balance deterioration caused by the pandemic and the disorganization of production chains. Compared to Q1'23, the deficit shrank 3.5% to US$12.5 billion.
This Letter IEDI analyzes our manufacturing foreign trade by technology intensity groups, following the OECD methodology. Thus, industrial activities were classified into four groups: high, medium-high, medium and medium-low technology intensity. The low-intensity range includes goods from agriculture, forestry, fishing and aquaculture, but does not include any branch of the manufacturing industry.
Unlike the 2023 pattern, the improvement in the industry's balance at the beginning of the year was concentrated in only one range: medium-low technology intensity, whose surplus increased 26.8% against Q1'23. The value of US$13.5 billion was the highest observed for a Jan–Mar period in current dollars. Both the 10.7% increase in exports and the 4.6% drop in imports worked in favor of the result.
Two branches were decisive for this performance: oil products, whose imports fell 18% in Q1'24 compared to Q1'23, and food, beverages and tobacco, whose exports increased 16.8% in the period. Both are the most significant sectors in terms of foreign purchases and sales, respectively, for the medium-low technology industry.
All other ranges, in turn, showed some worsening. In the case of the branches of higher technology intensity, traditionally in the red, the negative balance expanded compared to the same period of last year. In the medium technology intensity industry, there was a decline in surplus.
In the high-tech category, the trade deficit grew 3% in Jan–Mar'24 to US$11.1 billion, a record in current value for a first quarter. The 2.7% expansion of imports, due to aircraft and electronic products, had a great influence on this result. Exports of high technology were virtually flat (-0.2%).
In the case of the medium-high range, which accounts for most of the negative balance of the manufacturing industry, the deficit increased 4.4% to US$16 billion in Q1'24. The highlight is three of its branches, all with higher imports and lower exports: vehicles and auto parts, mechanical machinery and equipment, and electrical machinery and appliances. The most significant worsening was in the automobile industry, whose deficit jumped from US$976 million in Jan–Mar'23 to US$2.1 billion in Jan–Mar'24.
Finally, regarding the typical products of the medium technology intensity industry, the positive balance (US$1.2 billion) was 53.9% lower than in Q1'23, mainly because of the fall in the metallurgy surplus (-31.1%) due to the contraction in shipments (-18.8%). There was an increase in imports (+1.4%) of this group due to the deficit of rubber and plastic products and of miscellaneous goods.