São Paulo – Brazilian exports of manufactured goods grew above those of other groups of products in the first five months of 2012. The daily average of shipments rose 3.2% over the same period in 2011, as against just 0.8% in sales of basic items and retraction of 2.5% in trade of partly manufactured goods, according to figures disclosed by the Ministry of Development, Industry and Foreign Trade (MDIC).
Figures show that the participation of finished products in foreign sales of Brazil rose from 36.4% in the first five months of last year to 37% in the same period this year, on the opposite direction from what has been happening year on year since 2007. However, it is still not possible to say whether this means return to growth.
“It is too early to come to conclusions,” said Joseph Tutundjian, owner of Winner, a consultancy company in foreign trade and international investment. I hope it is [return to growth],” he added.
He believes, however, that the performance is more the result of specific factors, like transactions between units of a same multinational company and the delivery of orders made well in advance, as is the case with aircraft and heavy machinery.
According to the Ministry of Development, in the first five months of the year, sales of fuel oil, aircraft, machinery and equipment for land levelling, plastic polymers, pumps and compressors rose.
In the same line, the president at the Brazilian Foreign Trade Association (AEB), José Augusto de Castro, states that the performance from January to May is “focussed”, concentrated on few products.
In the case of fuels, for example, the coordinator of the international business and foreign trade course in the Continued Education Programme of Getulio Vargas Foundation (PEC-FGV), Evaldo Alves, points out that there is always a Petrobras effort to level its balance of trade. Sector imports also rose in the period.
According to Castro, there has not yet been time for appreciation of the dollar to have a significant result on exports. The US currency exceeded R$ 2.00 per dollar in May, and has remained at such a level ever since. “It takes from four to six months [for appreciation of the dollar to have a result],” he said. For the time being, the effect is “marginal”.
Castro believes that the international situation, with the crisis in Europe and the economy of Argentina down, does not allow for optimistic forecasts. It is worth recalling that Argentina is the third main market for Brazilian products, only after China and the United States. “The [January to May] performance should not be maintained,” he pointed out. “In June we should probably identify retraction,” he said.
Destinations
In this scenery, Alves and the professor of the University of São Paulo School of Economics and Business Administration (FEA-USP), Celso Grisi, point out that other emerging nations, mainly in Asia and Africa, helped boost sales of Brazilian industrialized goods. Both have slightly more positive views regarding the future of foreign trade.
“Early this year there was a very strong retraction of Brazilian industry, very bad performance. The reaction was targeting exports,” said Grisi. “Our emerging partners are still growing, at least in comparison with our level,” said Alves. The economy of Brazil grew just 0.2% in the first quarter, as against the same last three months of 2011, below the performance of other great emerging nations in Latin America, Asia and Africa.
In this light, the United States were the great exception. Sales of Brazilian manufactured goods to the greatest economy in the world rose 21% from January to May this year and totalled US$ 5 billion. The country significantly increased imports of oil products, machinery and equipment, organic chemical products, aircraft, electric material, vehicles and auto parts.
In this respect, Alves pointed out that Brazilian industry is competitive in some areas, like auto parts, electronic components and durable consumer goods. The country is, for example, a traditional exporter of engines and gearboxes, products used by carmakers worldwide.
Different from Castro, Grisi believes that appreciation of the dollar may have had some effect in May, at least with regard to export financing, and that if the dollar continues appreciating until the end of the year, there will be greater impact. According to him, the export industry has conditions to answer rapidly to favourable exchange rates.
*Translated by Mark Ament