How to Export to Brazil - Sprint Lazio

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II.6. External accounts Brazil – Ministry of External Relations Graph II.7 Net public sector debt – 1997-2006 % of GDP The main transformation that has been seen in the Brazilian economy in recent years is related to the position of its foreign accounts. The country went from a situation of crisis in its balance of payments, between 1997 and 2002 – due to the existence of a high deficit in the current account transactions and an international context characterized by successive crises in several countries –,to one of substantial increase in dollar reserves, resulting from the spectacular growth in exports (22.5% per year in the term 2003-2006), which allowed for the generation of substantial trade surpluses (US$ 45 billion in 2006). This resulted in the reversion of the balance in current transactions, which today has amounted to positive results that exceed 1% of the GDP “ in contrast with the deficits exceeding 4% at the turn of the millennium (Graph II.8). How to export to Brazil 27
Brazil – Ministry of External Relations Graph II.8 Balance of payments current account balance – 1997-2006 % of GDP The adoption of the floating exchange rate mechanism in 1999, which allowed for currency depreciation the spectacular growth in world trade and a series of transformations that took place in the Brazilian production structure in the last 10 to 15 years, has set a positive scenario and allowed for a “leap” in exports. The result has been a sufficiently high trade surplus that cleared the deficit in the services account, whose result has been historically negative in Brazil, especially due to the payments of the foreign debt service and the profit remittances of foreign companies operating in the country. In 2006, the deficit in the services account was close to US$ 40 billion. In this context, the performance of the capital account has been less relevant to the stabilization of the balance of payments. In fact, the country recorded a deficit in capital flows in 2004 and in 2005, which was brought about by the payment in advance of the Brazilian government’s debts with international organizations, such as the IMF and the Paris Club. This does not mean, however, that the country is attracting fewer foreign resources. The government and companies keep issuing a significant volume of bonds and other securities on the international market at decreasing interest rates, in line with the favorable evolution of the country-risk index (which was slightly above 200 basis points by the end of 2006). At the same time, the country keeps on attracting a significant volume of direct foreign investments, adding up to US$ 15 billion in 2005 and around US$ 16 billion in 2006. A fact worth noting is the increase in the volume of Brazilian investments abroad, which, in 2006, exceeded US$ 20 billion. Indeed, the internationalization of the Brazilian economy is increasingly becoming a two-way process, as several Brazilian companies adopt strategies to enter foreign markets, be it by establishing new subsidiaries or by taking over existing companies. In fact, Brazilian companies are following a trend that 28 How to export to Brazil
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Page 4 and 5: TABLE OF CONTENTS Brazil - Ministry
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IV.4.4. Opening a sales office in B
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V. GENERAL ADVICE TO EXPORTERS Braz
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Annexes Brazil - Ministry of Extern
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