* by Milton Lourenço

The world experienced a period of calm in the past five years, but Brazil’s participation in international trade was stagnant, as in 2007 it rose from 1.1 to 1.2% of all worldwide exports, a rate considered low by analysts considering the size of the Brazilian economy. With the global slowdown in 2008 caused by the reduction in U.S. economic growth, which ultimately affected many countries, especially China, the government forecast that this rate could reach 1.25% in 2010 looks condemned to wait some more years.

If it is still too early to make projections about the new world economic picture, on the other hand, it seems inevitable that Brazilian exports must gain a new profile in 2009. Today, the trend is the concentration of Brazilian exports in commodities. According to the Foreign Trade Association (AEB) for the first time since 1980, manufacturing should have a presence below 50% on the exports register in 2008.

So far, the trade balance has been maintained because commodities - especially iron ore, crude oil, and soy beans - have been growing in the light of rising prices, but not in volume, while manufactured products suffered from the valuation of the Real, which resulted in cancellation of orders. What’s happening, however, is that commodities also are losing steam.

According to the World Trade Organization (WTO), the rate of expansion of Brazilian exports in 2007 was below the average of Mercosur. Furthermore, Brazil was the least developed among the BRICs (Brazil, Russia, India and China), with its exports growing 17% in value, at US$ 160 billion. In volume terms, however, the increase in foreign sales was only 6.9%. With this, the country remained in 24th place among the largest exporters, the position it already occupied in 2006. In 2005, it placed 23rd.

Of these numbers, it appears that the country didn’t know how to take full advantage of favorable conditions presented by the global economic scenario until the end of 2007. And, if it didn’t when the conditions were excellent, now, it will not do so, since even the WTO is expecting a "difficult period" for everyone. In Brazil’s case, as the demand will be weaker, there will be, inevitably, a reduction in commodities prices. In other words, with recession in the rich markets, the country will have difficulty increasing its sales. In contrast, it should also import less, as the exchange moves to a less favorable level.

As it accounts for 25% of the world economy,  the U.S., of course, dictates the pace of the planet’s economy. So, displaying a hunting trophy because Brazil is now less dependent on the North American market doesn’t help a bit, remembering that the U.S. was responsible for 25% of our exports, but today represents only 15%. This, in practical terms, does not mean that the country is less dependent, but lost - and much - market. If this finding serves for anything, it may satisfy those who still think like at the time of the Cold War.

As when the U.S. loses all lose, Brazil will have many difficulties to compensate for that loss with sales to other markets, because the others also suffer from the slowdown of the U.S. market. This is the case of China, which is very dependent on the U.S. market and buys Brazilian raw materials in considerable quantities to produce its manufactured goods.

As commodities must suffer a setback, to compensate, Brazil will have to invest in new markets, especially for its manufactured products, which should be favored by the increase in the dollar. As a result, it is expected that Brazilian exports, from now on, will begin to gain a new profile. For this, the country needs to mount a strategy soon to increase its competitiveness in all sectors.