Despite Low Dollar Brazil Expects US$ 197 Billion in Exports This Year

Embraer plant in Brazil Numbers disclosed by the AEB (Brazilian Foreign Trade Association) show that the Brazilian trade balance surplus this year should be around US$ 23.150 billion. This represents a 42.2% reduction in comparison with the balance registered last year (US$ 40.039 billion).

The vice president of the AEB, José Augusto de Castro, says that the reduction is not greater because exports have grown significantly, due to the high cost of commodities.

Even with the expressive retraction, he said that it is a "good surplus", because imports are growing almost 44%. Castro said that the weight of basic products in the Brazilian export basket should grow this year. According to him, basic products should, certainly, break a record from the 1980s.

"Manufactured products should also break an export record, but a negative one. For the first time, they should be below 50% of the export basket, due to prices. Exchange rates are not helping export manufactured products, while in basic products the price of commodities causes them to be on a high level," analyzed Castro.

The AEB is concerned about the trade balance result for 2009 because commodities, in general, are losing strength. "And we do not know what energy they will have in 2009. If prices drop, we may certainly have a trade deficit in 2009. With exchange rates giving signs that they should remain stable next year, imports should continue growing. Maybe not at the percentage we are noticing this year. But any smaller percentage, accompanied by a reduction in exports, is bound to become a trade deficit," explained the vice president at the organization.

The study disclosed by the AEB forecasts expansion of 22.5% for exports this year, totaling US$ 196.760 billion. "It is a surprising increase, as it is in comparison with a very high base," defined Castro. Last year, he recalled, exports had already reached a strong US$ 160.649 billion.

When considering that global exports should grow between 14% and 15% in 2008, this means that Brazil is growing above the average of global trade. AEB forecasts have already exceeded the target established by the minister of Development, Industry and Foreign Trade of Brazil, Miguel Jorge, who had estimated US$ 190 billion.

The vice president at the AEB estimated that if the forecast for 2008 comes true, Brazil may reach 1.25% participation in global trade this year, which is the percentage established by the government as a target for 2010. Castro underlined, however, that this target is being reached due to the price increase. "And I imagine that the government would like it to be reached due to greater volume."

The three main products exported by Brazil in terms of value – iron ore, petroleum in bulk and soy – in grain and bulk – are part of the list of basic products and are the only ones that exceed US$ 10 billion each. The manufactured product in the best position is aircraft, with US$ 5.4 billion.

The AEB believes that depreciation of the Brazilian real affects the profitability and competitiveness of manufactured products, meaning loss of foreign market share. The organization also adds that the appreciation of the Brazilian currency should remove around 300 companies from foreign trade, especially micro, small and medium ones.

ABr

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