Best Case Scenario for Brazil in 2009: 10% Decline in Exports

Oranges, a Brazilian export product Brazil's ACCs (Adiantamento sobre Contratos de Câmbio – Advances on Exchange Contracts), which are used for financing exports, reached US$ 1.112 billion in the first week of December and US$ 44.146 billion in the accumulated result for the year so far.

The figures were taken from the flow of exchange, i.e. dollar inflow and outflow in the country, and were disclosed December 10 by the Central Bank of Brazil. During the same period last year, the figures were US$ 830 million and US$ 43.212 billion, respectively.

In the case of advance on export contracts (ACE), the surplus was US$ 441 million last week and US$ 42.5 billion in the accumulated result for the year so far, as against US$ 515 million and US$ 42.5 billion, respectively, in the same periods of 2007.

In the face of the worsening of the international crisis, in mid-September, exporters faced problems obtaining financing. However, according to the vice president at the Brazilian Foreign Trade Association (AEB), José Augusto de Castro, after the Central Bank held auctions in order to finance exports, there has been "a significant improvement" in the granting of funding to the sector. He stated, however, that the problem now is reduction in global demand, which is an effect of the crisis.

Castro claimed that despite the improved availability of funds, banks are now stricter when it comes to granting credit, and both exporters and buyers of products are distrustful because of the crisis.

Furthermore, the prices of commodities are lower. According to Castro, the ones most affected by this situation are micro and small-sized businesses, which comprise 90% of the 20,000 exporter companies in the country.

In a best-case scenario, according to Castro, exports would decrease by US$ 20 billion (10%) in 2009, compared with the current year. In the accumulated result for this year up until the first week of December, Brazilian exports total US$ 187.112 billion.

Castro preferred not to disclose the "worst-case scenario." He called attention to the fact that even the Brazilian Ministry of Development, Industry and Foreign Trade has postponed the disclosure of the country's export goals for 2009.

The information will only be made available next year. "If the government were to disclose it today, it would be a negative figure, but that scenario might change."



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