By Zhao Xinhua

Brazil is the world's leading textile and garment producer and one of the world's largest cotton producers. Relying on the advantages of cotton resources, Brazil's cotton spinning industry is relatively developed. Brazil's textile consumption shows the characteristics and trends of diversified development, and natural fiber fabrics such as cotton, hemp and silk are popular in the market. As the second largest cotton exporter in the world, Brazil's textile industry chain mostly exports raw cotton. In 2020/2021, Brazil's cotton exports surged by more than 70% due to the increase of cotton prices. Although the total export surplus reached an all—time high of 2 million tons, the do—mestic cotton consumption decreased significantly, which was only one fifth of the actual output.

ANEA expects Brazilian cotton exports to recover in 2022/2023, despite a decline in 2021/2022, as export demand remains strong and production is expected to recover to 2.85 million tonnes. However, the pandemic may affect China's port logistics and bring some impact on Brazil's cotton exports. The biggest buyer of Brazilian cotton this year is China, with 30.2 percent, followed by Vietnam, Turkey, Pakistan and Bangladesh, according to the association. Since June 2018, Chinese enterprises have significantly reduced U.S. cotton orders, and Brazil has replaced China as the largest destination of U.S. cot—ton exports.

Highly complementarity between China and Brazil

Brazil saw a spurt of orders with textile and gar—ment exports surging 17 percent in 2021 as a weak real boosted orders from key buyers in Argentina, the U.S. and Paraguay. That compares to a 27 percent decline to $151 million in 2020 during the height of the pandemic. Ap—parel exports from Latin America are expected to surge this year as U.S. brands ramp up orders in the region to ease supply chain woes. However, experts say a lack of raw materials could affect the expected results.

Figure 1 Trade balance of textile and clothing industry in Brazil (Unit: millions of dollars)

As can be seen from figure 1, the export of Brazil’s textile and gar—ment industry in 2021 was 1.064 billion US dollars, while the import was 5.163 billion US dollars. Although the import and export value in—creased year—on—year, the trade deficit continued to expand.

Figure 2 Brazilian foreign trade in textiles and clothing in 2021 (Unit: millions of dollars)

As can be seen from the figure 2, textiles accounted for 80 percent of Brazil’s textile and apparel export in 2021, while apparel accounted for 20 percent. In the import of textiles and clothing, the proportion of textiles was 72 percent and that of clothing 28 percent.

Figure 3 Foreign trade of textiles and clothing between Brazil and major countries and regions (Unit: millions of dollars)

As can be seen from the figure 3, Brazil’s textile and clothing are mainly exported to Argentina, Paraguay, the United States, Colombia, Uru—guay and other countries and regions, while imports are mainly from Chi—na, India, Paraguay, Vietnam, Indonesia and other countries and regions. Among them, China is Brazil’s largest trading partner, whether accessories and fabrics, or clothing, China is the first import source of Brazil’s textiles. Brazil imports China’s accessories and fabrics accounted for about 10 percent to 50 percent, imports China’s clothing ac—counted for about 55 percent to 65 percent.

China and Brazil are highly complementary in the field of textile and garment. Brazil has a strong production capacity of knitwear, while chemical fiber and woven fabrics are relatively weak. And chemical fiber is the advantage of Chinese textile in—dustry, the key of cooperation is to learn from each other. At the same time, Brazil is one of the top five export markets of eight categories of dyeing and printing products in China, with an export volume of more than 1 billion meters. It is of positive significance for Chinese enterprises to explore the Brazilian market and imple—ment the market diversification strategy.

Carry out various activities to restore economy

Since this year, in order to reduce the impact of the out—breaks, Brazil actively carry out commercial promotion activities, its retail start steady recovery, Brazil’s February sales rose 8 percent year—on—year, textile and apparel and footwear products to achieve sales growth for three consecutive months, but high inflation impact household spending power, Brazil in April, the consumer price index (IPCA) is 1.06 percent, 0.56 percentage points lower than in March.

“The most serious risk is global inflation, which has been going through a serious inflationary process for two years,” said SérgioVale, chief economist at MB Associados. “This is a crisis that has been going on for some time,” he added. Brazil’s inflation rate hit 1.06 percent in April, the highest for the same period since 1996. Brazil’s cumulative inflation rate over the past 12 months has reached 12.13 percent. Brazil has officially cut 11 import du—ties in an effort to curb persistent inflation.

At present, Brazil still maintains a double—digit inflation rate. Many enterprises have difficulty in predicting the prices of raw ma—terials and specific freight costs, and they have to shelve important investment decisions. High inflation rate, high interest rate and low growth expectation are the three characteristics of the current Brazil—ian economy. Due to the problems of Brazil's own economic structure, plus the superimposed factors such as the interest rate hike of the US dollar and the conflict between Russia and Ukraine, the current eco—nomic dilemma of Brazil has been aggravated, which may drag down Brazil's economic performance this year and next.