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November 13, 2012 2:17 am
Brazilian container shipping traffic flows indicate that a recovery in Latin America’s largest economy is moving more slowly than expected, with growth undermined by a fragile industrial sector.
Brazil’s international container traffic trade, which normally grows at two to three times the pace of gross domestic product, declined 0.4 per cent in the three months to September compared with a year earlier, research compiled for shipping group Maersk Line showed.
“What we have been hearing from economists is that GDP should start tracking upwards [but] we don’t yet see that in the volumes transported,” said Peter Gyde, chief executive of Maersk Line Brazil.
The slowdown in container traffic indicates that Brazilian efforts to stimulate the economy have yet to take hold in the form of a sustained recovery.
Unlike large emerging market economies in Asia, such as China, which invests the equivalent of up to 50 per cent of GDP, Brazil is trying to rebalance its economy away from an overemphasis on consumption to more investment.
The Brazilian government initially responded to the global slowdown with a swath of measures to stimulate consumption, from protection for the automotive industry, one of the most important manufacturers in the country, to tax breaks for consumers.
The government has since been trying to encourage greater investment through the announcement of major infrastructure packages for airports, roads and railways, with ports expected to be next.
The government’s stimulus measures, particularly for the car industry, have helped to boost GDP, which is expected to have grown 1.3 per cent in the third quarter.
But industrial production has been up and down, rising sharply in August before falling in September and rising again in October.
This is partly explained by the lumpy nature of tax breaks for consumers in the auto industry, which initially led to a rush to buy vehicles and then a corresponding increase in production.
“What I was expecting to happen at this point was that the recovery would be more widespread and that’s not clear yet,” said David Beker, economist with Bank of America Merrill Lynch in São Paulo.
He said he was forecasting GDP growth this year of 1.7 per cent and next year of 4.2 per cent but there was a risk these numbers would be revised down.
Investment in Brazil in dollar terms had declined every quarter compared with the previous quarter since mid-2011, he said. “The data are still very mixed.”
Maersk said container traffic underpinned the notion of a declining industrial sector.
Imports of machinery, appliances and electronics imports, necessary for industrial expansion, declined 9 per cent in the third quarter as did imports related to metals, mining and construction, plastic and rubber and automotives, which were down between 4 and 11 per cent.
On the other hand, imports of consumer goods rose 22 per cent, indicating that Brazil was still contending with a large inflow of goods from China and other parts of the world. Growth in exports to Asia slowed sharply.
“We’re seeing less of the machinery that is used in expanding production capacity here being imported,” said Maersk’s Mr Gyde.
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