Dollar's depreciation, tax regulations and high lending rates to pose turmoil for Brazil's plastics industry

11-Aug-08

Looking at the trade scenario of Brazil's plastics industry particularly imports, the industry claimed to be a third generation industry will subside owing to the mounting trade deficit, a senior official of Abiplast (Plastic product producers) expressed. Brazilian imports for H1 2008 amounted to US$1.10 bln, a massive 31.7% YOY rise thereby increasing the deficit by 62.1% YOY amounting to US$427 mln. On the flipside, the exports increased 14.7% valued at US$673 mln from January-June in 2008 relative to the same period last year. In volume terms, Brazil's imports amounted to 222,500 tons, up 15.3% YOY while the exports reached 168,400 tons, a 1.03% increase YOY, as per Abiplast's report. The reasons attributed to this increase in imports are depreciation of the dollar vis-à-vis Brazilian real, a massive tax burden, and the higher interest rates in Brazil than other nations. The plastics industry in Brazil is calling for corrective measures (and not subsidies) in order to have a reasonable competition vis-à-vis other nations.