Brazilian primary exports under uncertainty and oil shocks

Resumen

This article examines how uncertainty and crude oil price fluctuations influenced Brazilian primary product exports between 2010 and 2021. Using a gravity model estimated via Poisson Pseudo Maximum Likelihood (PPML), we test whether different uncertainty measures alter coefficient sensitivity. To address potential reverse causality, we include one-year lags of both the uncertainty index and oil price. Our results reveal a slight positive link between uncertainty and primary export volumes, reflecting Brazil’s comparative advantage in trading goods with inelastic global demand. In contrast, higher global oil prices correlate with lower export levels. Robustness checks (alternative uncertainty index and lagged regressors) confirm these findings. The study underscores the role of strategic economic management in leveraging Brazil’s strength in primary commodities, while highlighting the vulnerability of its trade balance to world energy market shifts. Overall, the paper provides evidence that trade policy and institutional reforms must consider external shocks to sustain export growth.