Brasília – By the end of 2010, Brazilian exports should reach an all-time high at around US$ 200 billion, exceeding even the foreign sales figure of 2008, the highest thus far at US$ 197.942 billion. According to estimates, there should be growth of 330% over the US$ 60.362 billion exports seen in 2002, according to the Brazilian Ministry of Development, Industry and Foreign Trade.
During the same period, imports have increased even further. The figure went from US$ 47.323 billion in 2002 to US$ 175.892 billion up until the 17th this month, and foreign purchases should be around US$ 8 billion in the eight working days left until the end of the year, based on the daily average for the month. Thus, in the eight years of Lula’s administration, imports should have increased by nearly 390%.
"It is undeniable" that Brazil has had significant gains in international trade, according to the executive vice president of the Brazilian Foreign Trade Association (AEB), Fábio Martins Faria. He claimed, however, that the foreign trade volume could have been bigger still, if it were not for "excessive red tape and control," and an "inadequate tax system," infrastructural shortcomings and the depreciation of the dollar against the Brazilian real.
In that respect, the secretary of Foreign Trade at the Ministry of Development, Industry and Foreign Trade, Welber Barral, admits that the exchange rate issue detracts from the competitiveness of Brazilian products’ prices abroad. However, he claims that if the country had a better infrastructure of roads and ports, and more adequate logistics, "then the effects of the depreciation of the United States dollar would not be as severe," and the Ministry of Finance would not have had to raise the Tax on Financial Operations (IOF, in the Portuguese acronym) for foreign operations.
Barrals claims that the strong expansion of the world economy seen in the current decade, up until the world financial crisis of September 2008, has led the demand for Brazilian products to increase, especially for commodities (internationally traded agricultural and mineral products). This scenario has enabled exports to grow, although "in a less healthy way, because the competitiveness of domestically manufactured products is decreasing."
An analysis of the Foreign Trade Ministry’s figures shows that the behaviour of Brazilian trade with other countries has had distinct moments. Exports were growing much more than imports up until 2006, when the trade balance reached a record-high surplus of US$ 46.456 billion. Starting on the following year, foreign purchases grew more and the surpluses began to drop, to the point in which the AEB estimated one of around US$ 17 billion for the current year.
This inversion of the trade balance started making itself felt more strongly by 2008, when the surplus dropped to US$ 24.957 billion and the country began posting a deficit of US$ 28.192 billion in current account transactions, a figure then equivalent to 1.72% of the Gross Domestic Product (GDP) – the sum of all wealth and services produced in the country. This negative result was seen again last year, at US$ 24.3 billion (1.55% of the GDP).
The current account deficit should double this year, and may reach up to 50 billion Brazilian reals (US$ 29.5 billion), according to the average expectation of one hundred economists that the Brazilian Central Bank surveys once a week for its Focus bulletin. According to these economists, the deficit should rise to US$ 69 billion in 2011, even though Barral believes the figure should be lower, at around US$ 60 billion.
To Fábio Martins Faria, such growth takes place because Brazilian exports of manufactured goods (high added value) are losing their competitiveness "due to impediments and high domestic costs," as well as due to "an irrational tax system," plus infrastructural problems and the appreciation of the real.
According to him, the situation calls for the country to adopt a permanent, active foreign trade policy, one that will maximize the competitiveness of exports, because "foreign trade is a key factor to the sustained economic and social development of Brazil."
*Translated by Gabriel Pomerancblum
