As the Olympic opening ceremony takes place in Rio de Janeirio this Friday, all eyes will be on Brazil and its struggling economy. In an article for the latest issue of specialist commerce publication, International Trade Magazine, Thomas Krieger, regional head of Latin America at Commerzbank, explains that Brazil’s economy is tied to its export trade; “Given an overreliance on revenues from traded commodities, the country has been suffering severely from price volatility in global markets. Brazil is now enduring a recession estimated to be the longest since the 1930s, and the deepest since 1901.” In fact, figures show that inflation, unemployment rates and fiscal deficits have all increased in the past four-five years.
The way out, Krieger suggests, lies through investment in more sophisticated, high-value exports – such as in the automotive and aerospace industries – that can better weather market fluctuations, along with the development of a manufacturing base to support these sectors. He argues that Brazil also needs to explore new markets for its exports, finding untapped demand in emerging South East Asia, for instance.
He notes, however, that strengthening commercial ties with established partners in Europe will be just as important as branching out to new ones. Maintaining such relations will require proven agents who can facilitate cross-border trade – with Commerzbank, for one, aiming to take a long-term perspective in this regard. Krieger points out that Commerzbank is committed to Brazil’s strategic position in world trade, opening its new subsidiary in Sao Paulo this year.
The article can be found on pages 70-71 of the new issue of the magazine here (please note: a subscription is required).