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Machinery Exports Grow 7% in Brazil, But Trade Balance Is Negative

In Brazil, foreign sales correspond to 40% of the machinery and equipment sector’s revenues, which should reach the end of the year at R$ 50 billion (US$ 23 billion).

In second place in the ranking of main exporters of Brazilian manufactured products, the sector should export US$ 9.2 billion up to the end of 2006.

This figure represents growth of 7% when compared to the US$ 8.6 billion registered in 2005. The main target markets for Brazilian machinery and equipment are the United States, Argentina, Germany, Mexico and the United Kingdom.

Despite the positive result, the sector’s trade balance will probably be negative for Brazil. Forecasts by the Brazilian Machinery Manufacturers Association (Abimaq) are that imports should be between US$ 10.2 billion and US$ 11 billion. This is a direct reflex of the depreciation of the dollar against the Brazilian currency, the real.

In the last previous two years the sector had had trade balance surpluses. In 2004, exports of machinery and equipment reached US$ 6.84 billion, representing an increase of 38.5% over 2003. Imports, in turn, reached US$ 6.836 billion, an increase of 18% when compared to 2003. This result represented the best performance for the sector since 1995.

In 2005, the sector exported US$ 8.6 billion, a performance 25% greater than in 2004. Imports, in turn, grew 24.2% and reached US$ 8.5 billion, thus guaranteeing a relatively leveled trade balance result.

According to the president at Abimaq, Newton de Mello, the forecasted growth of 7% in exports of machinery and equipment in 2006, despite shy when compared to the 25% growth in 2005, is due to the consolidated presence of Brazilian manufacturers on the international market, to export incentives and to the search for diversification of countries to which the products are exported.

The Arab countries, for example, represent 6.2% of the total exported by the sector from January to August 2006. Shipments to the Arab market totaled US$ 113 million  – 14% more than in the same period in 2005, when the countries of the Middle East and North Africa imported US$ 99.747 million. Saudi Arabia, the United Arab Emirates, Egypt, Morocco, Algeria and Tunisia are among the main destinations for products in the region.

According to the president at Abimaq, one of the segments in which Brazil has been investing in the search for clients in the Arab market is the agricultural machinery sector.

"Since 2002, eleven different companies have already participated in Saudi Agriculture, a fair in Riyadh, and all of them managed to establish partnerships with local distributors and also to open export markets, with good expectations for future business," explained Mello.

"We have also had the participations of Brazilian companies in exhibitions in the plastics sector in the Emirates, in 2004, and they were once again very successful," he pointed out.

Newton de Mello believes that business with the countries in the League of Arab States has great chances of expanding further. "The Arab countries may represent a more important market if we proceed with the work that is already being developed by Brazilian companies," he bets.

Partnership

The government and the private sector have been working together to guarantee the increase of Brazilian sector exports. In May 2006, a new agreement was signed between the Brazilian Export and Investment Promotion Agency (Apex) and Abimaq.

The project, made official during the International Machinery and Industrial Supplies Trade Fair (Mecânica), which takes place in the southeastern Brazilian state of São Paulo, forecasts investment of R$ 7.8 million (US$ 3.6 million) and participation of 101 companies.

The agreement will benefit 18 Abimaq sector chambers, among the 27 that exist in the organization. Since the partnership began, in 1999, this is the first time that such a significant number of companies participates in just one project.

The companies included make various kinds of capital goods, like machinery for the printing sector, for the textile and agricultural sector, industrial furnaces and sterilizers, and naval and offshore equipment, among others.

The target is for the companies participating to obtain a 10% increase in exports, which should grow from US$ 139.8 million to US$ 153.7 million. The chosen target markets for the execution of promotion actions are Colombia, Ecuador, Mexico, the United States, Italy and Argentina.

Among the project forecasts are company participation in seven important international fairs and the organization of seven buyer projects, which unite makers and importers especially invited to Brazil.

Seven Image projects are also planned, making possible the visit of foreign journalists to accompany the roundtables and learn about the sector, with the objective of contributing to the promotion of this industry as a player in foreign trade.

Both organizations have already promoted, together, 14 projects benefiting 1,681 companies. The total value invested over the last six years was R$ 35.5 million (US$ 16.5 million).

There has already been participation of 306 companies in the machinery and equipment sector in 40 international fairs abroad which resulted in the generation of US$ 11.5 million in business in 2002, US$ 12.6 million in 2003, US$ 26.11 million in 2004, and US$ 37.83 million from July 2005 to April 2006.

Nine buyer projects also took place – with business roundtables between foreign buyers and sector producers. They included the participation of 110 foreign companies and 572 Brazilian sellers. The value of the deals made in these roundtables reached US$ 30.5 million.

Anba – www.anba.com.br

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