Ipea projects GDP growth, investments, and exports with the Mercosur-EU agreement.
According to the study, Brazil would have proportionally higher growth than the EU and its partners.
247 - A study by the Institute for Applied Economic Research (Ipea) indicates that the entry into force of the free trade agreement between Mercosur and the European Union, approved this Friday (9), tends to generate relevant positive effects for the Brazilian economy over the next few decades. Estimates point to favorable impacts on the Gross Domestic Product (GDP), investments and the country's trade balance. The information is from InfoMoney.
According to the survey, between 2024 and 2040, the agreement could result in a cumulative growth of 0,46% in Brazil's GDP, which corresponds to approximately US$ 9,3 billion at constant 2023 prices, compared to a scenario without the treaty.
The results show that, in relative terms, Brazil would be the main beneficiary within Mercosur. Over the same period, the GDP of the European Union would have an estimated increase of only 0,06%, while the other countries in the South American bloc would register growth of 0,20%.
Basis of the projections
The researchers used data and projections from the International Monetary Fund for the period 2014 to 2026 and, from that point, extended the growth rates observed in the last year of the series to 2040. The study emphasizes that the simulations were prepared in early 2024, before the most recent changes to the text of the agreement, which expanded safeguards and protection mechanisms for the European market, especially in the agricultural sector.
Impacts on investments
In the area of investment, the Mercosur-EU agreement could increase the volume of investment in Brazil by 1,49% compared to the baseline scenario. Once again, the Brazilian result surpasses the estimate for the European Union, at 0,12%, and for the other Mercosur countries, at 0,41%.
According to Ipea, this performance is associated with the greater diversification of the Brazilian economy, which allows for broader benefits in different sectors resulting from the reduction of trade barriers.
Trade balance
The study also projects a net gain of US$302,6 million for Brazil in its trade balance. In the other Mercosur countries, the positive balance would be US$169,2 million. The European Union, however, would present an estimated loss of US$3,44 billion, as a combined result of tariff reductions and export quota concessions foreseen in the agreement.
The simulations detail the evolution of trade over time. Brazilian imports would tend to grow more intensely in the first years of the treaty's implementation, reaching a peak of US$12,8 billion in 2034, before declining to US$11,3 billion in 2040.
Brazilian exports, in turn, would advance continuously, reaching a cumulative gain of US$ 11,6 billion by the end of the analyzed period. This movement stems from the reduction of import tariffs in the European Union, the increase in exported quantities in sectors benefiting from quotas, and the fall in the domestic cost of inputs and capital goods, which tends to increase the competitiveness of Brazilian products.
Sectoral effects
For the European Union, the study indicates that imports would grow more rapidly in the first years of the agreement and then moderate, reaching a gain of 0,16% in 2040. Exports would also increase, but would remain below the growth of imports, ending the period with an increase of 0,12%.
In the other Mercosur countries, imports would grow in the first ten years, reaching a variation of 1,10% in 2034, before falling to 0,92% in 2040. Exports from these countries would fall in the first six years, but then reverse the trajectory, reaching growth of 0,97% at the end of the analyzed period.
Technical analysis of the results
According to Fernando Ribeiro, planning and research technician at Ipea and one of the authors of the study, "the benefit that Brazil would have from the agreement is greater than that of its Mercosur partners because the Brazilian economy is more diversified and would have more extensive gains in sectoral terms." He added that the difference in relation to the European Union is expected, since it is a significantly larger economy.
The simulations also indicate significant effects on production and employment in Brazil. Most sectors of agribusiness would show gains from the agreement, while any losses would be concentrated in specific industrial segments, such as vehicles and auto parts, ferrous metals, clothing, textiles, pharmaceuticals, machinery, equipment, and electronics.
