Jan 4, 2012

Brazil: Imports of Consumer Goods Rose Sharply in the Last Decade

Over the last 10 years, the Brazilian domestic demand has been stimulated by measures such as increase in real wages, government programs of income distribution, credit expansion and mainly, the appreciation of exchange rate. The unemployment rate is very low, which has pushed wages, which are also at record levels.

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However, the expansion of supply has not kept pace with demand. Industrial production shows stability, and what we see is that this excess demand has been matched mainly by increasing of imports. In the chart below, the left axis shows the volume of imports of consumer goods. As we can see, the volume of imports of consumer goods reached USD 40 billion in 2011, and shows an average annual growth of 17%. On the right axis, we see the share of imports of consumer goods in relation to total imports, and this value was 11% at the beginning of the last decade and is now close to 18%.

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This data raises the following question: is this framework sustainable? In fact, increased imports have been financed by high international prices of major commodities exported by the country. While commodity prices to remain high, they will continue to finance consumption in Brazil.

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Commodity Prices
Balance of Trade

Source: MDIC

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