MercoPress. South Atlantic News Agency
Brazil’s trade surplus down 40% in 2010 boosted by demand for imports
Brazil’s trade surplus this year should reach 16 billion US dollars, which is 40% below 2009, according to Foreign Trade Secretary, Welter Barral. He added it was too early to talk about 2011 targets, given the world scenario and “at this stage we can’t say if we are going to run a (trade) deficit next year”.
“The government has several factors to take into account before closing the 2011 estimates: the recovery of the European and US economies remains uncertain. We also have the issue of the foreign exchange rate and the foreign inflow of investments, which is not an easy equation”, said Barral.
In this scenario it is still too early to anticipate if Brazil will have a trade deficit. “Imports this year have soared pushed by domestic demand, but a reduction of consumer credit availability will also reduce the inflow of imports the same way as massive investments in the real economy also help cut imports”, added Barral.
The Brazilian trade surplus to the first week of December stood at 15.5 billion US dollars which is 33.37% less that the 23.5 billion of the same period a year ago. “We’re working on those (2011) numbers now” revealed Barral following a meeting of the Brazil/US Business Council in Sao Paulo.
Barral also disclosed that the government is assessing the proposals from the Brazilian Car manufacturers association, (Anfavea) with the purpose of increasing competitiveness. Automobile are one of Brazil’s main manufacture exports.
“We received interesting proposals but it should also be remembered that the car export industry in Brazil already enjoys strong tax exemptions. They are claiming for less bureaucracy”, said Barral. “All the proposals refer to ways to bring down costs, input and bureaucracy”.
The minister also downplayed a direct link between the stronger Real and export difficulties. “The exchange rate is important but because of other elements: if we had cheaper logistics, a less bureaucratic tax system the exchange rate issue would not be that important. But if we don’t advance on those fundamental reforms, the exchange rate remains a crucial issue”.
But the proposals to overcome those difficulties in logistics and bureaucracy in 40 sectors of the economy are a chapter of the 2011/2014 Productive Development Policy program that will be announced by president-elect Dilma Rousseff.
Barral also pointed out that in spite of the strong exchange rate, exports to the US increased 19.5% this year and imports 35%. “We’ve grown quite a bit, a significant recovery compared to a year ago, which was a flat-down year, but we still are behind pre-crisis levels”.
Finally he revealed that Brazilian sales to the US are divided in 50% manufactured goods and 40% trade between US corporations and their branches in Brazil.
“Our exports to the US this year have grown more than those to China and Japan. We are managing a greater market share in the US which is good for diversification”, concluded the Brazilian Trade minister.
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Read all comments“The minister also downplayed a direct link between the stronger Real and export difficulties.”
Dec 10th, 2010 - 02:33 am 0Só pode ser maluco. So having the most overvalued currency in the world doesn't weight on exports? Such denial shows that there's an effort by the orthodoshiites to downplay that correlation - the one between currency and exports - perhaps because they're unwilling to curb the entry of foreign speculative money even if such money hurts national businesses. They put gringo speculators' interests above those of the industries.
Forgetit87, there is no denial. As I typed here before, a strong currency is good for the people. strong currency is purchasing power. The money what you receive in your hands is more worth. You can make allot of money, but what is it worth. that should always be the question. Okay, export, if you read well, what I think you did, you can maintain your export position, whatever position that is, by getting rid of the bureaucracy..what he meant is TAX reform (less bureaucracy, lower costs,etc etc)..“Fundamental Reform” what Brazil needs to become more competitive. If Dilma Rousseff truly thinks about that and truly will do, will be an amazing transformation for Brazil in it's history. It sounds exaggerated (of course some will type that here) but if you think about it, than Brazil can flex is muscle more than ever what it is capable.
Dec 10th, 2010 - 02:52 am 0Those “gringoes” (yes I know it means foreigner in Brazil) speculators will come to Brazil anyway, even they are being taxed now, but they are going there because if you watch news what is happening in the US and Europe, they know the opportunities to make money is outside that bubble. As the boss of hedge fund Blackstone on the online magazine let its audience of a Goldman Sachs organized party let know is/was ”I'm in Brazil while the USS (ship) is sinking”. Now you can imagine what that means when an arrogant Hedge Fund manager says that openly and doesn't care than making money.
Fido, a strong currency might afford an inflated purchasing power, but one that facilitates the purchasing of imports only. That is not good for national businesses and increases the current account deficit. Brazil has had a current account deficit crisis in a very recent past. That was in 1999. The reason for that crisis was again the unsustainably strong currency. Argentina and some the East Asian countries - South Korea, Indonesia, Philippines, and Malaysia - also experienced a crisis in the period, and all of them, if I'm not mistaken, did so over a strong currency, all of them had pegged their respective currencies to the same value as the dollar. It is for me a bit unbelievable how the Brazilian Central Bank remains so flippant about the currency; it is as if they're so headstrong orthodox, that that prevents them from learning from experience. All they take into account in driving the economy is ideology.
Dec 10th, 2010 - 03:40 am 0That bureaucracy doesn't help, I agree. A fiscal reform would also go a long way in reducing production costs and thus in making exports cheaper. But a fiscal and bureaucracy reform is not going to happen overnight. If the government tries to alter the status quo - and Dilma indication a disposition to do so when campaigning - there will be opposition from all sides: from state governors, from the opposition coalition for whom any gain by the government is a political loss, and from Dilma's more leftist allies in the government coalition who have supporters among public servants.
So the quickest way to boost exports, is really by devaluing the currency, just like China and other successful East Asian countries have done.
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