Alfredo Valladão on the Eurostat trade and investment statics: The EU-Brazil trade relationship is in good shape, but there is plenty of room for improvement

Commentary by Alfredo Valladão, President of the EUBrasil Advisory Board,

on the Eurostat trade and investment statics

The EU-Brazil trade relationship is in good shape, but there is plenty of room for improvement.

The last batch of EU-Brazil trade and FDI statistics shows that in spite of the current global crisis, trade between the two partners has overcome the post sub-primes drop and is thriving again. The increase of Brazilian imports of European products clearly reflects the booming moment of the Brazilian economy and the strength of the Real, while the sustainment of a good level of European imports from Brazil is good news, despite the present low growth perspectives in the UE. This makes for a dwindling and small European deficit in trade in goods, largely compensated by its traditional important surplus in the area of trade in services.

Eurostat also shows that most of European exports (90%) are manufactured products while near two thirds of Brazilian ones are primary goods. The good news notwithstanding, this is still a very unbalanced trade relation. With the EU economies in need of investment and growth, Brazilian businesses should be able to seize the opportunity to set foot in Europe in order to export more value-added products and take advantages of the present very interesting possibilities of direct investment.

A bright spot in the bilateral relations is also the important volume of European FDI into the Brazilian economy – the EU members are still the biggest investors in the country and the amount of the European investment stock in Brazil are higher than the EU investment stock in the other BRICS put together. This makes for a very close relationship between European businesses and the Brazilian market, either trough exports or direct investments. Brazilian FDI in Europe is still low and irregular, but many Brazilian firms are starting to look more seriously at how to take advantage of the still very huge EU market.