MercoPress. South Atlantic News Agency

Brazil feels the pinch

The Argentine situation, lower international commodity prices and a reduction in aircraft industry sales will have a considerable impact in Brazil's foreign sales and trade balance.

According to Brazil's Foreign Trade Chamber, (CAMEX), CEO Mr. Gianetti da Fonseca, the three factors will add up to a loss of 7 billion US dollars this year, over half of which, 3,8 billion, to non purchases from Argentina.

"Sales to Argentina this year will be below 1,5 billion US dollars when in 2001, not a good year, they reached over 5 billion US dollars", said Mr da Fonseca.

The other reductions, between 2 and 3 billion US dollars correspond to depressed commodity prices and one billion to a rescheduling of purchases by Embraer, Brazil's aircraft industry, overseas clients.

However Mr. Gianetti da Fonseca was optimistic about the overall balance because in spite of a 10% reduction in exports during the first quarter, sales begun picking up strongly in the second quarter and should close 2002 with a 5% increase.

"Trade with China, Russia and India is particularly encouraging and it's hard to imagine a worse scenario in Argentina. Besides as the American market begins recovering our air industry sales will follow", indicated Mr. Gianetti da Fonseca.

"Fortunately in early 1999 the government launched an export oriented policy which has boosted our foreign trade", said the CEO of CAMEX , "but any how it will take a long time to recover the 1985/99 period when the country was flooded with cheap imports".