MercoPress. South Atlantic News Agency

President Rousseff hints to further stimuli measures for manufacturing sector

Trade surplus in August dropped 17% and estimates for the full year are not encouraging

Brazilian president Dilma Rousseff said her government would continue with the policy of reducing labour costs to favour companies and improve their competitiveness and hinted that new initiatives referred to power costs for industry could be in the pipeline.

“What we called tax reductions for the labour monthly payment bill is important since it reduces the cost of labour and helps increase competitiveness of companies”, said Rousseff during the program “Coffee with the President” which is transmitted through the government radio and television network.

“The plan has been implemented for some time now, and very successfully helping reduce production costs but with out infringing on workers rights”, she added mentioning the program to boost industry, “Brazil mais grande” (A larger and powerful Brazil), which she promised to keep supporting as the country faces the effects of the international crisis.

Among those initiatives to be announced in a few days could be the reduction of power costs by 10% for factories and other manufacturing sectors. 

The announcement comes when Brazil's trade surplus fell sharply in August from a year ago forcing to cut the forecast for exports revenue this year as the world economy curbs the price and demand for local products.

The trade surplus was 3.227 billion dollars in August, the Trade Ministry said, above the 2.9bn posted in July. Still, the surplus fell 17% in August when compared with the same month last year.

A fall in both volume and prices of key exports such as iron-ore and sugar has dragged down Brazil's trade surplus this year, causing the government to forecast zero growth in exports at best.

“We are fighting to keep exports at the same levels of 2011,” Deputy Trade Minister Alessandro Teixeira told reporters in Brasilia. ”We are facing a very adverse outlook for exports in both the type of products and the (economic) health of our partners. There is not much we can do.”

In 2011, Brazilian exports reached 256 billion dollars and the government had originally forecast exports of 264 billion this year. Teixeira said the global slowdown has hit the appetites of major commodity consumers like China and India.

In the first eight months of the year, Brazil's export revenues fell 3.7% from the same period a year ago, and 34.1% in the January-August period compared with the same period last year.

Export volumes of iron-ore fell 3% while prices fell 24% in the first eight months of 2012 versus the previous year. Sugar export volumes tumbled 19%, while prices fell 24% in that same period. Imports rose 0.5% in the first eight months of 2012 versus the previous year.