São Paulo – The machinery sector had a record trade deficit in the first five months of this year, according to figures disclosed by the Brazilian Machinery Manufacturers Association (Abimaq) on Wednesday (29). The deficit was US$ 7.2 billion, as a result of exports of US$ 4.4 billion and imports of US$ 11.6 billion. "Imports reached a record value for the last seventy years,” said Abimaq president Luiz Aubert Neto.
Exports grew 32.9% over the same period in 2010, but imports expanded further in the period, by 33.7%. The president at Abimaq demonstrated concern with the imports and said that there is being deindustrialization of the sector. According to him, Brazilian factories themselves are importing products from China, instead of producing their equipment, they purchase machinery abroad and sell under their brands.
According to Neto, for this reason, despite having low installed capacity, the sector is hiring more (personnel to assemble imported parts) and revenues have risen. Sector revenues grew 9% from January to May as against the same months in 2010, to 31.4 billion Brazilian reals (US$ 20 billion). "China is playing its part, it is Brazil that is not competitive,” said Neto, relating the trend to exchange rates, high tax burden on Brazilian industry, excessive interest and other economic factors.
The United States was the main supplier of machinery to Brazil from January to May, with US$ 2.9 billion and growth of 29.6%, followed by Germany, with US$ 1.5 billion and expansion of 43.7%, and China, with expansion of 49.6%, to US$ 1 billion. The remaining suppliers in the top ten supplier list are, in this order, Japan, Italy, South Korea, Switzerland, France, the United Kingdom and Sweden. In May alone, imports totalled US$ 2.7 billion, with growth of 37.6% over the same month last year.
But Brazil is also exporting more machinery and equipment. The main destinations from January to May were the United States, Argentina, Mexico, Germany, the Netherlands, Peru, Paraguay, Chile, Colombia and Venezuela. Machinery for logistics and civil construction, as well as components for the capital goods industry, answered to almost half of the exports, according to the president at Abimaq. In May alone, exports grew 39%, with revenues of US$ 1.01 billion.
*Translated by Mark Ament
