4.7% of All Brazil Exports Go to Arabs, a 35% Jump

Brazil's Perdigão Brazilian exports to the Arab countries generated US$ 7.07 billion from January to September, an increase of 35% over the same period last year. The region's participation in total Brazilian sales reached 4.69%, the largest in the history of bilateral relations. The figures were supplied by the Ministry of Development, Industry and Foreign Trade.

The main products shipped were chicken and beef, a total of US$ 2.2 billion, followed by ores (US$ 1.15 billion), sugar (US$ 1.12 billion), partially manufactured iron and steel products, including rebar (US$ 431 million), vehicles and auto parts (US$ 265.4 million), machinery and equipment (US$ 227.2 million), aircraft (US$ 167.5 million), vegetable oils (US$ 136 million), cereals (US$ 129.2 million) and coffee, tea and spices – mainly coffee (US$ 107 million).

To the secretary general at the Arab Brazilian Chamber of Commerce, Michel Alaby, exports in September still reflect orders placed for Ramadan, which coincided with that month this year. Despite the daily fasting observed by the Muslims during Ramadan, consumption of food is high in the evenings. Apart from that, the month is followed by a holiday and celebrations for the breaking of the fast.

The figures show that shipments to the Arab countries have not been affected by the international financial crisis for the time being, as contracts supplied up to September were signed before the worsening. Alaby believes that the reflexes should not be felt this year and believes in bilateral trade, the total exported plus the total imported, of between US$ 18 billion and US$ 19 billion up to the end of 2008.

Up to September, imports of Arab products totaled US$ 8.36 billion, an increase of 101% over the first nine months of 2007. Bilateral trade reached US$ 15.43 billion. "Possible effects should only take place after new contracts are signed, in January," said Alaby.

He pointed out that even if the crisis affects trade between Brazil and the Arab world, the impact should not be great, as a large part of the Brazilian products exported is made up of food. The region depends greatly on the import of foods to supply the needs of its population and, even in the case of global recession, food is always the last item to be cut by consumers.

In the same line, the specialist in foreign trade and executive director at Rodobens Trading, Joseph Tutundjian, stated that the effects of the crisis on the trade balance of Brazil as a whole "should not be devastating", as agribusiness occupies a share of 36.7% of country exports and Brazil is mainly responsible for the country's trade surplus.

Just to give an idea, from January to September Brazil posted a US$ 31 billion surplus in its trade balance, whereas the agribusiness sector alone had a surplus of US$ 36.6 billion. Under this light, Tutundjian believes that exports to the Arab countries should be less affected by the crisis. Apart from that, he pointed out that, despite the depreciation of some agricultural commodities, the prices of some products, like meats, should continue on the rise.

Alaby added that, despite the recent drop in oil prices, large exporters of the commodity, especially the countries of the Gulf, still have high liquidity due to funds accumulated in recent years. "They may be more careful in the case of investment, but not in trade," he said.

To Tutundjian, what may affect bilateral trade is lack of exporter credit in Brazil. He does not believe in a significant reduction in demand in the region, especially among large producers of oil, who are less subject to the risk of the financial crisis. "The problem is more here than there," he said.

The main destinations for Brazilian products in the Arab world from January to September were Saudi Arabia, with imports of US$ 1.86 billion, an increase of 73.13%, Egypt (US$ 955.77 million, a 3.13% drop), the United Arab Emirates (US$ 943 million, 0.61% more), Kuwait (US$ 492.25 million, growth of US$ 210%), and Algeria (US$ 418.12 million, expansion of 18%).

The main highlight in the period was Kuwait, which entered the list of five main markets in the region. The products that weighed heaviest in the trade balance were meats, whose imports grew almost 100% and reached US$ 237,500, and partly manufactured products in iron and steel, which were not purchased by the country from January to September last year, but in 2007 figured as the second main time in the trade basket, with purchases of US$ 207.4 million.

In the area of imports, the main products purchases by Brazil from January to September were oil and oil products (US$ 6.7 billion), fertilizers (US$ 882.2 million), inorganic chemicals (US$ 305.7 million), salt, sulphur, stones, etc., mainly phosphoric acid (US$ 253.3 million), aluminum (US$ 32 million), garments (US$ 29.4 million), electric material (US$ 28 million), plastic and its products (US$ 22.5 million), sardines (US$ 15.5 million) and organic chemical products (US$ 12.3 million).

In September alone, Brazilian exports generated US$ 965 million, 53% more than in September last year. Imports, in turn, totaled US$ 815 million, growth of 58%. The surplus for Brazil was US$ 150 million, the greatest this year. In fact, in 2008 the trade balance was positive for Brazil in February. In the accumulated result for the first nine months of the year, however, Brazil posted a deficit of US$ 1.29 billion.

Anba – www.anba.com.br

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