MercoPress. South Atlantic News Agency

One in five manufactured goods consumed in Brazil were imports

CEO Castelo Branco, record imports attributed to strong currency and ‘systemic’ costs

Almost one in five manufactured goods consumed in Brazil during 2011 was imported, according to the ‘commercial opening coefficient’ survey undertaken by the country’s National Industry Confederation, CNI, and released this week in Sao Paulo.

The Brazilian imports penetration coefficient which considers both final consumption and inputs for industry showed that 19.8% of goods came from overseas, which was a record and two percentage points up from 2010. Of the 27 sectors considered in the survey, 21 saw an increase in the coefficient compared to 2010. They include optics, computers, electronics, communications, particularly mobile phones and derivates of petroleum and bio-fuels.

The participation of imported input for the Brazilian manufacturing sector (mainly commodities, machinery and equipment) also established a record, 21.7% in 2011. This was 2.6 percentage points higher than in 2010 and 0.4 percentage point ahead of the 2008 record. For 24 of the 27 sectors considered the coefficient was up including optics, computers and electronics.

The CNI CEO Flavio Castelo Branco said the record imports penetration can be attributed to the strong Brazilian currency, domestic consumption, tax incentives to imports and the so called systemic costs such as heavy tax burden, deficient infrastructure and high interest rates, with a clear tendency to keep increasing.

“If nothing is done to attenuate the systemic costs, the situation will worsen with the economy’s growth limited because of the low performance of domestic industry”, said Castelo Branco.

Similarly the CNI survey showed that the exports’ coefficient was similar to that of imports. The share of manufactured goods exports in industrial production was 19.8%, which was also two percentage points higher than in 2010. This was the second year running that the index grew but it is still far below the record year of 2004 when exports represented 22.9% of industrial production.

The sectors which had a better evolution in the exports’ share included metallurgy, machines and equipments, textiles and the transformation industry that concentrates the largest technological innovation, most added-value and the best paid labour. This last sector was up 1.1 percentage point in 2011 reaching 15%.

Brazil in spite of an overall trade surplus, mainly from agriculture and extractive industries, is estimated to have experienced a manufactured goods deficit of 92.5bn dollars last year according to stats from CNI.