Despite Weak Dollar Brazil Exports Grow 28%

Despite the devaluation of the United States dollar against the Brazilian real, Brazilian exports are still growing at an accelerated rhythm.

The country’s foreign trade revenues rose 27.9% in the first five months of this year when compared to the same period last year, and 23.6% in May when compared to the same month in 2004.


In the accumulated result for the last twelve months, the increase was 32.6% when compared to the 12 previous months.


“Exporters know that if they retreat due to the dollar, they may lose the markets they have won through hard work,” stated Amarillys Romano, an economist at Tendências consultants.


Brazil had revenues of US$ 43.4 billion with exports between January and May, against US$ 33.9 billion in the same period last year. In May, sales totalled US$ 9.8 billion, almost US$ 2 billion more than in May 2004.


According to the vice president of the Brazilian Foreign Trade Association (AEB), José Augusto de Castro, it is mainly large companies that are staying on the foreign market despite exchange rates.


Among the small companies, according to Castro, a retreat due to the weaker dollar has already begun. In March, for example, the number of Brazilian companies participating in foreign trade dropped by 259. In April, the number fell by another 11 companies.


However, there is no drop in exports. “In the month of June, exports should reach US$ 10 billion,” stated Castro.


The percentage of growth of exports in the second half of this year, though, should be smaller, according to the vice president of the AEB, as exports rose very much in the second half of last year. “The base for comparison is higher,” he said.


Between January and May, not only manufactured but also semi-manufactured and basic products had record export revenues.


Sales of basic products rose 15.4%, reaching US$ 11.7 billion, those of manufactured products rose 34.4% to US$ 24.5 billion, and those of semi-manufactured products rose 35.7%, to US$ 6.3 billion.


The increase in the price of iron ore, according to Amarillys, influenced the performance of basic products. Other commodities, like sugar, coffee and soy have also presented price increases.


The United States were the main destination for Brazilian exports between January and May, followed by Argentina and China.


Exports to Eastern Europe, however, grew 61.7%; to Africa, 48.4%’; to the Latin-American Integration Association (Aladi), 40.8%; 37.6% to the Mercosur, the customs union between Brazil, Argentina, Paraguay and Uruguay; 28% to the Middle East; 19.9% to Asia and 18.6% to the European Union. Sales to China dropped 3%.


Imports also presented significant growth in the first five months of the year: 22.2% over the same period in 2004. Brazil spent US$ 27.8 billion in foreign purchases, US$ 5 billion more than in the beginning of 2004.


The increase, according to Castro, is not only due to the purchase of imported raw materials but also due to that of capital goods and to the increase in oil prices.


The AEB vice-president believes that industries are taking advantage of exchange rates to purchase machinery and to change domestic inputs for foreign inputs, due to prices.


The economist from Tendências, in turn, interprets the import figures as a sign that the Brazilian industry is investing.


Imports of capital goods rose from US$ 4.5 billion between January and May last year to US$ 5.7 billion this year.


Purchases of raw materials rose from US$ 12.2 billion to US$ 14.5 billion and those of petroleum from US$ 2.5 billion to US$ 2.9 billion.


ANBA – Brazil-Arab News Agency – www.anba.com.br

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