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23/08/2017 - 07:00hs
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Exports to Arab countries keep climbing

Sales to the region fetched USD 1.1 billion in July, up 14% year-on-year. Egypt was the top buyer in the month. Year-to-date through July, sales increased by 15% to USD 7.16 billion.



São Paulo – Exports from Brazil to Arab countries came out to USD 1.1 billion in July, up 14.37% year-on-year. Year-to-date through July, exports reached USD 7.16 million, up 15.35% year-on-year. The numbers are from the Brazilian Ministry of Industry, Foreign Trade and Services and were compiled by the Arab Brazilian Chamber of Commerce.

In July alone, the highlight was Egypt at USD 295 million, up 110% year-on-year. The country was the biggest Arab importer of goods from Brazil, outbuying Saudi Arabia and the United Arab Emirates, which usually place first and second, respectively.

The performance was primarily driven by higher sales of sugar, poultry and maize, and to a lesser extent by bigger sales of beef, iron ore, soy and beans.

“Egypt’s imports are really picking up,” said Arab Brazilian Chamber president Rubens Hannun. The government of Egypt is buying foodstuffs from Brazil, especially meats, via its Ministry of Defense. The goods are ultimately sold to end consumers. “These exports to the Ministry of Defense will tend to continue,” said the Chamber’s CEO Michel Alaby.

Other factors explain Egypt’s rising imports. Up until the end of last year, the country struggled with scarce resources as foreign tourist inflows dwindled, weak international trade impacted its Suez Canal revenue, foreign direct investment remained lackluster, and an exchange rate peg kept the Egyptian pound artificially strong against the US dollar.

After reaching an agreement with the International Monetary Fund (IMF) for a USD 12 billion loan, in November 2016 the Central Bank of Egypt embraced a floating exchange rate system, causing the pound to lose value and bringing foreign cash back into the country. Earlier this month, the bank said its foreign exchange reserves had exceeded USD 36 billion – higher than before 2011, the year in which the Arab Spring, a popular uprising, put an end to the rule of then-president Hosni Mubarak. In other words, the availability of strong currency to pay for imports increased.

Alaby added that another reason exports from Brazil increased, and not just to Egypt, but to Arab countries as a whole, is the fact that the Hajj and Eid Al Adha are drawing near – they will fall between late August and early September this year. The Hajj is the great annual pilgrimage of Muslims to Mecca, in Saudi Arabia, and Eid Al Adha is the “Sacrifice Feast,” a religious holiday in memory of Abraham, who was about to sacrifice his son to God, but once his devotion had been proven, God provided a sheep to be sacrificed instead. These celebrations mean demand for food products goes up.

Other July highlights were a 131.5% increase in exports from Brazil to Iraq, which reached USD 86.65 million; to Oman, up 35% to USD 47.51 million; and to Tunisia, which climbed 318% to USD 45 million.

Year-to-date

Year-to-date through July, Saudi Arabia was the top Arab buyer of Brazilian goods at USD 1.54 billion, up 6.84% year-on-year. The UAE came in second at USD 1.27 billion, up 15.6%.

Egypt placed third here, with USD 947.62 million in imports, down 6.51% from January to July 2016. In other words, the strong results from July did not suffice to offset the decline seen in the first half.

Regarding the increase in exports, the main highlights from January to July were Djibouti, with an increase of 317.5%, owed especially to sales of sugar, soil levelers and poultry; Bahrain (81.8%), due to iron ore, inorganic chemical products and soil levelers; Qatar (70.6%) due to vehicles, inorganic chemical products and defense equipment; Iraq (60%), owed to shipments of sugar, poultry, beef and cattle; and Oman (54.5%), due to sales of iron ore, poultry, indicator devices and defense equipment.

Sugar and beef and poultry were the main items exported by Brazil to the Arab world from January to July, with iron ore coming in at third. The increase in the sales of vehicles is another of the year’s highlights.

According to an analysis by the Intelligence Department of the Arab Chamber, the data shows that the embargo placed by other Arab countries on Qatar didn’t impact Brazil's business with that country, and that exports of meats to the Middle East and North Africa increased again, after some decline seen in the first six months as an impact caused by investigation Operação Carne Fraca, by the Federal Police Department, which looked into suspicions of irregularities in meat plants and the work of supervisors of the Ministry of Agriculture.

“The 15% growth [in exports from January to July] is within what we expected,” said Rubens Hannun. “The forecasts are coming through,” added Alaby.

Imports

On the other hand, Brazil imported USD 3.88 billion from the Arab countries in 2017’s first seven months, up 19.2% over the same period of last year. The highlight was the increase of imports from Algeria, Saudi Arabia, Morocco and Egypt, among the main suppliers.

In the case of Egypt, there was a 200% increase, owed to fertilizers, fuels and conserve olives. “We imported a lot more, from Egypt especially, and that’s great, it’s the return [for the increase in Brazilian exports],” added Hannun.

Overall, imports of fertilizers from Arab countries increased 52% from January to July of this year in comparison with the same period of 2016. This was the factor that most impacted the performance as a whole. This group of products, plus oil, gas and products, accounts for 90% of everything that Brazil purchases from the region.

*Translated by Gabriel Pomerancblum and Sérgio Kakitani

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