Record imports lead to more dependence on the Brazilian chemical industry

The pandemic had already posed the risk of excessive reliance on basic items not manufactured in Brazil, but the war in Ukraine brought this scenario up a notch, leading the Brazilian chemical industry to increase its dependence on key imports.

One of the world’s largest food producers, Brazil imports 95% of the fertilizers it employs in agribusiness operations. In an interview with Jovem Pan, the foreign trade director of the Brazilian Chemical Industry Association (Abiquim), Denise Mazzaro Narranjo, commented on the harmful effects of deindustrialization in the country.

“The industry is affected by imports and suffers because it cannot compete with products from abroad. Thus, the direct consequence is deindustrialization and various subsequent crisis. In fact, in the medium and long term, the lack of investment is the worst that can happen to the industry as the lack of investment leads to production halts on several fronts,” warned the expert.

The chemical industry installed in Brazil guarantees that there are no conditions to compete with the main markets in the world today due to the lack of tax reforms in the country, which makes the business environment much more hostile and costly. In developed economies, such as the United States, the government grants subsidies to the chemical sectors hence its importance. The cost of logistics, inputs, and, above all, energy are much higher in Brazil.

The director of institutional relations at Abiquim, André Passos Cordeiro, reinforces that the market sector he represents condemns the process of opening the market by reducing import tariffs, which is what the government is doing without discussing structural reforms. “We have policies concerning the monetary aggregate, as well as the fiscal aggregate, but we don’t have economic development policies. What’s the solution? Buy everything from the rest of the world.”

“That is the phenomena we observe in the chemical industry’s trade balance, which has overarching impacts since we need chemicals for everything—from civil construction to steel making, passing through cement, mining, and agriculture. Everything comes down to chemicals; thus, when this sector starts showing signs of a rebound, and we didn’t develop any policies, we run in search of imports. This problem affects our foreign exchange reserves, reduces the margins of businesses with fixed prices, and we start snowballing again,” Cordeiro criticized.

In 2010, Brazil imported US$ 33 billion in chemical products (about R$ 177 billion). Ten years later, in 2020, the volume rose to US$ 41 billion (about R$ 220 billion); in 2021 alone, imports reached US$ 61 billion (about R$ 327 billion). In the first half of 2022, there was a record US$ 29.7 billion (about R$ 160 billion) in imports.

Source: Jovem Pan

To read the full original article, please go to: https://jovempan.com.br/programas/jornal-da-manha/recorde-de-importacao-no-setor-quimico-aumenta-dependencia-em-produtos-estrategicos.html

Sharing is caring!