Brazilian Companies Stop Exporting Due to Weak Dollar

The 16.5% increase in Brazilian export revenues in the first four months of this year was the result of improved international market prices rather than increased sales volume, according to the Foreign Trade in Perspective bulletin issued yesterday, May 18, by Brazil’s National Confederation of Industry (CNI).

The report underscores the appreciation of the real in relation to the dollar, on the order of 37% in the last three years, during which the profitability of exports declined 29%, and foresees a deceleration in this year’s export sales.

In the first quarter, the average prices of products such as iron ore, crude oils, petroleum, and sugar, which are selling for 45% more than they did in the first quarter of 2005, rose 12.1%. These increases, according to the CNI, explain the growth in the dollar value of exports.

In the medium-term, "an increase is expected in the concentration of export sales in the hands of a small number of firms and thus an offer of fewer products." The CNI predicts that the nominal value of exports will grow 10% this year, to US$ 130 billion.

According to the Confederation, various companies are abandoning export activities, after achieving a profitability of as much as 25.6% during the period 2003-2005.

"In the first quarters of 2005 and 2006, one can observe a decline of 681 in the number of export companies, equivalent to 6% of the total," the document reports. Export volume in the first quarter of 2006 was up 7.2% in comparison with the first quarter of 2005.

Agência Brasil

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