China and US’s Growth Should Boost Brazil’s Exports

The growth of some of the main world markets may benefit Brazilian exports this year. Forecasts by the United Nations are for growth of 3.1% in the United States, the largest Brazilian customer abroad, in 2006, and around 6% in Argentina, the second largest importer of Brazilian products.

China, which is the third main world destination for Brazilian products, should have Gross Domestic Product (GDP) growth of 8.3%.

"Our main buyer markets are growing: Argentina, which is a regional market, the United States, a traditional one, and China, a new market," stated the coordinator of the Economic Diplomacy course at the University of Campinas (Unicamp), Mário Presser.

According to the professor, there should be an increase in the volume exported, but the main gain in Brazil will take place due to higher product prices. The increase in world demand is going to maintain basic product prices elevated.

Producers of foods and ores will benefit most from world growth. "China is a large importer of Brazilian iron ore. Vale (mining company Vale do Rio Doce) and (ironworks) Companhia Siderúrgica Nacional (CSN) should have their shares appreciated this year," stated the economic analyst of consultancy company GRC Visão, Thiago Davino.

Iron ore was the main product in the trade basket between Brazil and the Chinese in 2005. Aircraft were the products most bought by the Americans and cars were the main purchases by the Argentineans.

China and the US also purchased agricultural commodities, products that should have their prices appreciated this year, from Brazil. Among the ten main items in the Brazilian trade basket with the Chinese are soy, tobacco, soy oil, wood and cotton.

Coffee, a commodity that should be appreciated in 2006, was the ninth most sold product by Brazil to the North Americans last year. "The growth of China is going to cause the maintenance of foreign trade volumes and sustainable prices," stated the economist at Tendências consultants, Amarillys Romano.

The economy of the Arab world should grow around 7% this year, according to the secretary general of the Arab Brazilian Chamber of Commerce, Michel Alaby. "To the Arab countries we may sell all kinds of products," stated the economist at Tendências.

The Arab nations import a large variety of products, as the local economy is focussed on the production of oil. Last year the main products in the basket from Brazil to the 22 Arab countries were sugar, poultry and ores. Saudi Arabia is the 21st main buyer of Brazilian products.

The good performance of exports should also benefit other Brazilian economic indices. "World growth favors all indices. If you export more, you produce more, generate more jobs," stated Amarillys.

"A surplus in exports reduces the risk of exchange crises, reduces the Brazilian risk factor and makes foreign credit to the country cheaper," explained Mário Presser. Thus, companies may make loans abroad and invest in the country.

Not all Brazilian sectors, however, benefit form exports to growing world markets. Thiago Davino, from GRC Visão, recalls that the Chinese growth also means greater competition for some sectors, among them the shoe, furniture and manufactured product sectors.

The UN forecasts growth of 3.3% for the world economy as a whole in 2006. In developed countries, the organization forecasts growth of 2.5% and in developing countries, 5.6%. Growth in India is expected to be 6.3% and in Africa, 5.5%. Chile and Venezuela should grow 5.5%. World trade, according to the United Nations, should grow 7.2% this year.

Anba – www.anba.com.br

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