Hike in machinery imports spreads concern among Brazilian industry

Amid weak domestic demand, Brazil’s machinery and equipment sector has found relief in exports, says José Velloso, CEO of the Brazilian Association of Machinery and Equipment Industry (Abimaq). However, increasing machinery imports raise concerns for domestic manufacturers.

According to data compiled by Abimaq, Brazil exported R$ 12.2 billion worth of machinery and equipment in 2022, close to the record of R$ 12.3 billion in 2012. This year, the total is expected to reach R$ 13.5 billion.

From January to August this year, Brazil’s main capital goods exports were nuclear reactors, boilers, machinery, mechanical and electrical appliances and instruments, automobiles, tractors, aircraft, and space vehicles.

Velloso argues that these numbers could be higher and attributes the shortfall to a lack of credit and insurance for machinery exports, which puts Brazil at a disadvantage compared to other producers.

“Less than 1% of what we export benefits from financing. The previous government dismantled the Brazilian Agency for Fund Managers and Guarantees (ABGF) and the export credit insurance system (SCE),” he says. “Machinery is something that someone buys to increase productivity with reliability. If we export, it’s because we have technology, and the market sees us as important.”

In this regard, he says that payments from the Brazilian Development Bank (BNDES) to support the export of Brazilian-made goods would come in handy.

“We had two or three default cases used politically to demonize support for service and machinery exports. Which development bank in the world doesn’t finance exports? That’s unheard of,” he says. “If it’s essential to sell iron ore and pulp, why not high-value-added goods that generate foreign exchange, jobs, and taxes for Brazil?”

On the other hand, says Cristina Zanella, Executive Director of Competitiveness, Economics, and Statistics at Abimaq, machinery imports have been growing. “Imports are important because they affect various segments of the economy. While machinery sales in the domestic market fell by 13% from January to August, imports grew by 13.8% in the same period,” she says. “It’s a trend that raises concerns for the sector.”

See below Brazil’s imports of machinery items (hs code 84) from the beginning of 2019 until past August. The data is from DataLiner.

Machinery imports | Jan 2019 – Aug 2023 | TEU

Source: DataLiner (click here to request a demo)

From January to August, among the main capital goods items that Brazil imported were nuclear reactors, boilers, machinery, mechanical appliances, electrical appliances, sound or image recording devices, as well as automobiles.

Source: Valor Econômico

To read the original news text, go to: https://valor.globo.com/brasil/noticia/2023/10/06/importacao-de-maquinas-e-equipamentos-ja-preocupa-industria.ghtml

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