trade openness indicators
CNI Indicators ISSN 2317-708X • Year 5 • Number 2 • April/June 2015
TRADE OPENNESS INDICATORS Brazilian currency depreciation begins to take effect The Import penetration ratio for general industry amounted to 22% in the second quarter of 2015 (accumulated in four quarters), virtually unchanged from the previous quarter (21.8%). As compared to the second quarter of 2014, however, the ratio is up by 0.5 percentage points.
19.2%
Export to output ratio
The Export to output ratio for general industry stood at 19.2% in the second quarter of 2015 (accumulated in four quarters), up by 0.6 percentage points from the first quarter of 2015. Compared to the same quarter last year, the indicator experienced a lower growth rate (0.3 percentage points)
22.0%
Import penetration ratio
Effect of exchange rate on prices and volumes The effect of the Brazilian currency depreciation on export volumes is not yet significant. In the four quarters from Q3 2014 to Q2 2015, the value of exports in US dollars experienced a 3.9% drop as compared to the previous corresponding period (Q2 14 to Q1 15). Despite this drop, the export to output ratio edged up from 18.6% to 19.2% in the period, reflecting the impact of a depreciated Brazilian real on export profitability, i.e. a positive effect on revenues in domestic currency from sales abroad. The indices of export price and volume calculated by Funcex show that the decline in export values in US dollars was led by a reduction in prices and by a still modest increase in export volumes. The effect on export volumes takes longer to be felt because of difficulties involved in entering new markets, even when companies are aware of them already. There is also a negative impact of a long period of appreciation of the Brazilian currency on industry competitiveness and of its effects on business strategies for participating in foreign trade. The sectors showing the highest growth rates of export volumes are also those showing high export to output ratios. This suggests that sectors that continued to sell a significant share of their production to foreign markets in the recent period have managed to respond more quickly to a competitive exchange rate. The impact on import volumes is also felt in the long term. In the short run, what we see is an increase in import costs, i.e. an adverse effect of the exchange rate on import prices in domestic currency. In the four quarters from Q3 2014 to Q2 2015, import prices in US dollars fell by 6.1% from the previous corresponding period (Q2 2014 to Q1 2015). The import volume index of intermediate goods fell by 6.8% in the last four quarters (up to June 2015) over the same period the year before, reflecting the impact of a decline in domestic production on imports. Nevertheless, the import penetration ratio in industry did not show a drop – it went up from 21.8% to 22% in the period due to the effect of the exchange rate on prices, which is still greater than the impact on volumes.
Export to output ratio – General Industry* Accumulated in four quarters In % - current prices 25
20.1
19.0
20
19.5
17.3
15
18.5 18.3
18.7
17.5
* General industry includes Mining and quarrying and Manufacturing.
19.2
Note: Figures for 2011, 2012, 2013 and estimates for 2014 and 2015 have been revised after the Annual Survey of Industry (PIA) for 2013 was released by the Brazilian Institute of Geography and Statistics (IBGE) in June.
10
5
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 2007 2008 2009 2010 2011 2012 2013 2014 2015
Import penetration ratio - General Industry* Accumulated in four quarters In % - current prices 25
20.0
19.0
20
22.0
17.5
17.0
20.9
* General industry includes Mining and quarrying and Manufacturing.
21.5
18.7
15
16.6
Note: Figures for 2011, 2012, 2013 and estimates for 2014 and 2015 have been revised after the Annual Survey of Industry (PIA) for 2013 was released by the Brazilian Institute of Geography and Statistics (IBGE) in June.
10
5
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 2007 2008 2009 2010 2011 2012 2013 2014 2015
Sectoral indicators In Manufacturing, the export to output ratio reached 16.0%, up by 0.7 percentage points as compared to both the immediately preceding quarter and the same quarter of 2014. Meanwhile, the import penetration ratio held virtually steady, up from 20.2% in the first quarter of 2015 to 20.4% in the second quarter.
In Mining and quarrying, the export to output ratio totaled 67.9%, representing a 5-percentage point increase from the first quarter. The import penetration ratio also increased by 4.5 percentage points to 55.4%. It is worth stressing that this industry experienced a 9.2% decline in domestic production, which exceeds the drop in the value of exports (-2.1%) and imports (-5.5%) in domestic currency, thus pushing the ratios up.
Which sectors in manufacturing recorded the highest variations in the quarter? EXPORT TO OUTPUT RATIOS Accumulated in four quarters Q2 2015
SECTORS
Most significant increases
Most significant decreases
Q2 2015/Q1 2015
(%)
Q2 2015/Q2 2014
(percentage points)
Other transport equipment
52.0
5.9
15.6
Basic metals
34.8
2.4
8.8
Wood
29.8
1.9
7.1
Motor vehicles
14.5
1.6
0.6
Tobacco
25.5
12.3
24.1
Leather and footwear
25.0
0.8
2.1
Refined petroleum products and biofuel
4.6
0.8
3.8
IMPORT PENETRATION RATIOS Accumulated in four quarters Q2 2015
SECTORS
Most significant increases
Most significant decrease
Q2 2015/Q1 2015
(%)
Q2 2015/Q2 2014
(percentage points)
Other transport equipment
47.2
3.2
9.2
Computers, electronics and opticals
52.0
3.0
7.3
Machinery and equipment
36.4
1.6
1.1
Pharmaceuticals
39.4
1.5
2
Basic metals
19.9
1.3
3.6
Refined petroleum products and biofuel
19.0
1.3
2.2
TRADE OPENESS INDICATORS Export to output ratio
SECTORS
Import penetration ratio
Q2 2015
Q2 2015/ Q2 2015/ Q1 2015 Q2 2014
Q2 2015
(%)
p.p.
(%)
Q2 2015/ Q1 2015
Q2 2015/ Q2 2014 p.p.
19.2
0.6
0.3
22.0
0.2
0.5
Mining and quarrying
67.9
5.0
7.3
55.4
4.5
10.2
Manufacturing
16.0
0.7
0.7
20.4
0.2
0.3
General Industry*
* General industry includes Mining and quarrying and Manufacturing. Note: Figures are accumulated in four quarters until the current quarter. Figures for 2014 and 2015 are estimates.
i
Learn more For more information, including tables and methodology, please visit: www.cni.org.br/cac
Print Click here to download the printable version of this document.
TRADE OPENNESS INDICATORS| Quarterly Publication of the National Confederation of Industry - CNI | www.cni.org.br | Policy and Strategy Directorate - DIRPE | Economic Policy Unit - PEC | Executive manager: Flávio Castelo Branco | Research and Competitiveness Unit - GPC | Executive manager: Renato da Fonseca | Technical Team: Samantha Cunha, Henry Pourchet (Funcex) and Edson Velloso | Technical Information: +55 (61) 3317-9472 | Graphic design supervision: Carla Gadêlha | Subscriptions: Customer Service - Phone: +55 (61) 3317-9992 - Email: [email protected]. This publication may be reproduced, provided that the source is mentioned. Document prepared on August 12, 2015.
TRADE OPENNESS INDICATORS Brazilian currency depreciation begins to take effect The Import penetration ratio for general industry amounted to 22% in the second quarter of 2015 (accumulated in four quarters), virtually unchanged from the previous quarter (21.8%). As compared to the second quarter of 2014, however, the ratio is up by 0.5 percentage points.
19.2%
Export to output ratio
The Export to output ratio for general industry stood at 19.2% in the second quarter of 2015 (accumulated in four quarters), up by 0.6 percentage points from the first quarter of 2015. Compared to the same quarter last year, the indicator experienced a lower growth rate (0.3 percentage points)
22.0%
Import penetration ratio
Effect of exchange rate on prices and volumes The effect of the Brazilian currency depreciation on export volumes is not yet significant. In the four quarters from Q3 2014 to Q2 2015, the value of exports in US dollars experienced a 3.9% drop as compared to the previous corresponding period (Q2 14 to Q1 15). Despite this drop, the export to output ratio edged up from 18.6% to 19.2% in the period, reflecting the impact of a depreciated Brazilian real on export profitability, i.e. a positive effect on revenues in domestic currency from sales abroad. The indices of export price and volume calculated by Funcex show that the decline in export values in US dollars was led by a reduction in prices and by a still modest increase in export volumes. The effect on export volumes takes longer to be felt because of difficulties involved in entering new markets, even when companies are aware of them already. There is also a negative impact of a long period of appreciation of the Brazilian currency on industry competitiveness and of its effects on business strategies for participating in foreign trade. The sectors showing the highest growth rates of export volumes are also those showing high export to output ratios. This suggests that sectors that continued to sell a significant share of their production to foreign markets in the recent period have managed to respond more quickly to a competitive exchange rate. The impact on import volumes is also felt in the long term. In the short run, what we see is an increase in import costs, i.e. an adverse effect of the exchange rate on import prices in domestic currency. In the four quarters from Q3 2014 to Q2 2015, import prices in US dollars fell by 6.1% from the previous corresponding period (Q2 2014 to Q1 2015). The import volume index of intermediate goods fell by 6.8% in the last four quarters (up to June 2015) over the same period the year before, reflecting the impact of a decline in domestic production on imports. Nevertheless, the import penetration ratio in industry did not show a drop – it went up from 21.8% to 22% in the period due to the effect of the exchange rate on prices, which is still greater than the impact on volumes.
Export to output ratio – General Industry* Accumulated in four quarters In % - current prices 25
20.1
19.0
20
19.5
17.3
15
18.5 18.3
18.7
17.5
* General industry includes Mining and quarrying and Manufacturing.
19.2
Note: Figures for 2011, 2012, 2013 and estimates for 2014 and 2015 have been revised after the Annual Survey of Industry (PIA) for 2013 was released by the Brazilian Institute of Geography and Statistics (IBGE) in June.
10
5
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 2007 2008 2009 2010 2011 2012 2013 2014 2015
Import penetration ratio - General Industry* Accumulated in four quarters In % - current prices 25
20.0
19.0
20
22.0
17.5
17.0
20.9
* General industry includes Mining and quarrying and Manufacturing.
21.5
18.7
15
16.6
Note: Figures for 2011, 2012, 2013 and estimates for 2014 and 2015 have been revised after the Annual Survey of Industry (PIA) for 2013 was released by the Brazilian Institute of Geography and Statistics (IBGE) in June.
10
5
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 2007 2008 2009 2010 2011 2012 2013 2014 2015
Sectoral indicators In Manufacturing, the export to output ratio reached 16.0%, up by 0.7 percentage points as compared to both the immediately preceding quarter and the same quarter of 2014. Meanwhile, the import penetration ratio held virtually steady, up from 20.2% in the first quarter of 2015 to 20.4% in the second quarter.
In Mining and quarrying, the export to output ratio totaled 67.9%, representing a 5-percentage point increase from the first quarter. The import penetration ratio also increased by 4.5 percentage points to 55.4%. It is worth stressing that this industry experienced a 9.2% decline in domestic production, which exceeds the drop in the value of exports (-2.1%) and imports (-5.5%) in domestic currency, thus pushing the ratios up.
Which sectors in manufacturing recorded the highest variations in the quarter? EXPORT TO OUTPUT RATIOS Accumulated in four quarters Q2 2015
SECTORS
Most significant increases
Most significant decreases
Q2 2015/Q1 2015
(%)
Q2 2015/Q2 2014
(percentage points)
Other transport equipment
52.0
5.9
15.6
Basic metals
34.8
2.4
8.8
Wood
29.8
1.9
7.1
Motor vehicles
14.5
1.6
0.6
Tobacco
25.5
12.3
24.1
Leather and footwear
25.0
0.8
2.1
Refined petroleum products and biofuel
4.6
0.8
3.8
IMPORT PENETRATION RATIOS Accumulated in four quarters Q2 2015
SECTORS
Most significant increases
Most significant decrease
Q2 2015/Q1 2015
(%)
Q2 2015/Q2 2014
(percentage points)
Other transport equipment
47.2
3.2
9.2
Computers, electronics and opticals
52.0
3.0
7.3
Machinery and equipment
36.4
1.6
1.1
Pharmaceuticals
39.4
1.5
2
Basic metals
19.9
1.3
3.6
Refined petroleum products and biofuel
19.0
1.3
2.2
TRADE OPENESS INDICATORS Export to output ratio
SECTORS
Import penetration ratio
Q2 2015
Q2 2015/ Q2 2015/ Q1 2015 Q2 2014
Q2 2015
(%)
p.p.
(%)
Q2 2015/ Q1 2015
Q2 2015/ Q2 2014 p.p.
19.2
0.6
0.3
22.0
0.2
0.5
Mining and quarrying
67.9
5.0
7.3
55.4
4.5
10.2
Manufacturing
16.0
0.7
0.7
20.4
0.2
0.3
General Industry*
* General industry includes Mining and quarrying and Manufacturing. Note: Figures are accumulated in four quarters until the current quarter. Figures for 2014 and 2015 are estimates.
i
Learn more For more information, including tables and methodology, please visit: www.cni.org.br/cac
Print Click here to download the printable version of this document.
TRADE OPENNESS INDICATORS| Quarterly Publication of the National Confederation of Industry - CNI | www.cni.org.br | Policy and Strategy Directorate - DIRPE | Economic Policy Unit - PEC | Executive manager: Flávio Castelo Branco | Research and Competitiveness Unit - GPC | Executive manager: Renato da Fonseca | Technical Team: Samantha Cunha, Henry Pourchet (Funcex) and Edson Velloso | Technical Information: +55 (61) 3317-9472 | Graphic design supervision: Carla Gadêlha | Subscriptions: Customer Service - Phone: +55 (61) 3317-9992 - Email: [email protected]. This publication may be reproduced, provided that the source is mentioned. Document prepared on August 12, 2015.
