São Paulo – A delegation from the International Monetary Fund (IMF) and the Foreign Trade secretary of the Brazilian Ministry of Development, Industry and Foreign Trade, Tatiana Lacerda Prazeres, convened for a meeting last Thursday (31st) in Brasília to discuss the effects of the economic crisis on the Brazilian trade balance and the influence of exchange rate fluctuations on foreign trade.
Prazeres presented Brazil’s 2012 export figures to the IMF mission, led by Martin Kaufman. Foreign sales were down 5.3% from 2011, and imports were down 1.4%.
According to the Foreign Trade secretary, the performance owed itself to the fact that European demand remained bearish, and to the economic crisis aftermath, which resulted in diminished demand for Brazil’s export products.
Prazeres discussed with the IMF mission the sway that exchange rates hold on foreign trade. Government-induced currency depreciation, such as the US dollar’s, has a negative effect on Brazilian exports. Whenever the dollar loses value relative to Brazil’s real, the competitiveness of Brazilian exports drops. The country is disputing the practice at the World Trade Organization (WTO).
“It is clear to us that this is a complex matter, and it takes time to determine the best way to address the impacts that exchange rate distortion has on trade flows. Nevertheless, we positively can no longer pretend that the issue doesn’t exist,” said Prazeres, according to information from the Ministry.
*Translated by Gabriel Pomerancblum
