November 26, 2012
economy is showing signs of a rebound in the second half of 2012 and this should gain strength in 2013. Much of the improvement is based on an expectation of recovering export markets, especially
, higher commodity prices and a mild, though still uncertain, recovery in the global economy. Moreover, anticipation of increased domestic expenditure in the run up to the FIFA World Cup in 2014 and Olympic Games in 2016 is expected to result in a 4% to 5% rise in GDP.
Numerous economic indicators point in the direction of improving business conditions, including a further drop in inflation, which had already fallen to 5.4 % in October, and September's unemployment rate which, also at 5.4%, is near a record low. Together with rising average incomes, this is all helping to sustain domestic consumption. The Brazilian Real (BRL), has stabilized over the past year following a period from 2009 to mid-2011 during which it gained almost 50% against the US$ making imports more attractive in
The upshot of these factors is that
is becoming increasingly attractive as an export market, especially as more established markets are either stagnating or shrinking. However, as with any foreign market, successfully exporting to
can prove elusive without the right preparation - and precautionary measures. In Q3 of 2012, 7.9% of payments by consumers and 5.9% of payments by businesses in
were made more than 90 days late. In addition, at 126
out of 183 countries,
ranks fairly low on the World Bank's 2012 assessment of the 'Ease of doing Business'.
Atradius has put together a package of valuable information to aid businesses that are interested in building their trade with companies in
, consisting of two publications - '
Trade successfully with Brazil
' and the
'Brazil Country Report
' - and a live webinar '
The key to business success in Brazil
' (to be streamed live over the internet on 28 November), in which experts on doing business in
will discuss many of the key issues that exporters to
'Trade successfully with
' highlights 10 factors that a business should address when - or even before - entering into an export contract with a company in
. Among the issues covered are:
- understanding the social and business culture of Brazil, to ensure better preparation for negotiating and meeting customer expectations
- gaining an awareness of the relevant - and sometimes onerous - regulations that may impact the sale
- complying with local laws, even when the contract is based on the laws of another country
- making sure that the buyer's representative agreeing to the sales contract is authorised to do so
- protecting sales against the risk of non-payment
The Brazil Country Report outlines the country's current economic and business conditions, providing essential market information that can improve a supplier's credit management. On the whole,
macroeconomic policy has been sound but many structural deficiencies, such as a complex and burdensome tax regime, fiscal inflexibility, rigid labour laws and overregulation are hampering long term economic development. The poor infrastructure of the country has already impeded its growth.
In the short term, domestic demand is expected to be fuelled by lower interest rates and the additional budgetary stimulus offered in recent months. In 2013, growth is expected to rebound to 4.2 % as private consumption, business investment and external demand - especially from
- pick up. However, higher inflation (forecast to reach 5.7 % in 2013) is expected to be a negative side-effect of this recovery, potentially forcing monetary policy to again become more restrictive. In the medium term, investments - in infrastructure leading to the World Cup and Olympic Games and in offshore oil fields - will contribute to real economic activity and, hopefully, to extra foreign exchange revenues. Atradius expects economic growth rates of 4% to 5% for 2014 and 2015.
Those interested in attending the Atradius webinar '
The key to business success in Brazil
' can do so by visiting