MercoPress. South Atlantic News Agency

Brazilian industry confident depreciation of the currency will help spur exports

“The new level the dollar has reached benefits local manufacturing and exports,” Fiesp's foreign relations and foreign trade director, Antonio Bessa said.

Brazil's private sector believes the depreciation of the Real against the dollar can help spur a manufacturing sector recovery even though the business climate has been affected by the Petrobras scandal, an official with the Federation of Industries of the State of São Paulo, Fiesp, said.

 “The new level the dollar has reached benefits local manufacturing and exports,” Fiesp's foreign relations and foreign trade director, Antonio Bessa, said upon receiving a Slovenian delegation of business leaders in the technology sector.

The Brazilian currency Real has slid 18.14% relative to the greenback thus far this year and fell last week to 3.30 Real per dollar, a level not seen since 2003.

“This exchange rate imbalance can halt the process of deindustrialization,” Bessa said, adding that a “wave of unemployment” in factories can be reversed via an expansion in exports of manufactured goods.

The Fiesp is forecasting a 1.7% contraction in Brazil's GDP this year, compared to financial markets' expectation for an 0.83% decline, but Bessa said the country will remain the world's eighth-largest economy and that there are reasons to believe economic output will not shrink in 2015.

In addition to the competitive advantages for Brazil's export sector, he also pointed to other welcome developments such as the recovery of countries in the European Union, positive signs from Japan and U.S. economic growth.

In effect Bessa pointed out that at the start of 2015 the United States - “after many years” - leapfrogged Argentina as the leading importer of Brazilian manufactured goods.

The Fiesp official said the corruption scandal currently affecting oil giant Petrobras will not adversely affect foreign investment because companies “look at the long term.” He acknowledged, however, that “any departure from normality affects the business climate.”

In the ongoing investigation, prosecutors accuse outside contractors, including some of Brazil's leading engineering firms, of inflating the invoices they sent to the oil giant and splitting the extra money with corrupt Petrobras officials.

Some of the loot was also allegedly set aside to pay off politicians, most of them belonging to the ruling party coalition, that provided cover for the graft.

The scandal is partially responsible for a plunge in President Dilma Rousseff's approval rating, which currently stands at around 13%, according to recent polls.