Message of Brazilian Ambassador to Switzerland

25/03/2010
Maria Stela Pompeu Brasil Frota

Annual Report 2009; pag. 31

The year 2009 saw a number of decisive developments for the world economy. Depending on choices made by governments, the world could have been plunged into a severe recession or moved toward more sustainable development. Fortunately, firm measures preventing global economic catastrophe were taken on a coordinated basis, enabled by enhanced international governance of the economy and the emergence of the financial G-20. The crisis has not yet been entirely overcome. There are still challenges to tackle and areas of concern that require attention from our governments, as well as the willingness to work together to find solutions. Nevertheless, the general feeling is that the situation is better than it was a year ago. Both Brazil and Switzerland were well placed in terms of economic management before the crisis, so its effects have been relatively less severe. Now they are preparing to seize opportunities opening up at this stage, as expectations of recovery strengthen. Bilateral economic relations between our countries have seen positive developments, such as more balanced trade flows and their continuing growth.

Aggregate numbers for trade between Brazil and Switzerland show that our bilateral relationship has gradually grown stronger, particularly since 2004. Brazil's exports jumped from US$ 349 million in 2004 to US$ 1.9 billion in 2009 after growing every single year. In 2009 alone, growth on 2008 reached 31.4%. On the import side, the upward trend has been equally substantial. From just over US$ 1 billion in 2004, Swiss exports to Brazil reached US$ 2 billion by 2009, and there was only one annual fall (8.8%, for 2009 on 2008).

From 2004 to 2009, then, the flow of trade almost tripled from US$ 1.4 billion to US$ 3.9 billion. Another point to note is that exports and imports have been more balanced, particularly after last year's numbers. Brazil's deficit with Switzerland was US$ 729 million in 2004, compared with US$ 139 million in 2009, after peaking at US$ 1 billion in 2007.

I could not fail to mention our concern for the heavy concentration of Brazilian exports, since our top three exports to Switzerland are metal commodities worth nearly US$ 1.5 billion and accounting for 77% of the total. We believe that our agricultural and industrial products require broader access to the Swiss market.

In relation to investment, Swiss companies continue to be a major source of FDI in Brazil, while Switzerland hosts a growing number of Brazilian companies. As in the trading sphere, we must look to the future for opportunities to further develop our interchanges rather than be complacent about this good retrospective.

There are enormous investment opportunities in Brazil, which is following a path of accelerated long-term economic growth. The economic policy of President Luiz Inácio Lula da Silva operates on several different fronts with the aim of ensuring sustainable development. Without sacrificing fiscal responsibility and commitment to stability, the Brazilian government is taking measures to boost potential for economic growth through infrastructure investments as part of its Growth Acceleration Program (PAC), in many cases involving partnership with the private sector. At the same time, the government is prioritizing higher levels of consumption for the Brazilian people, especially the poorest sections. The domestic market has been strengthened by a series of measures such as a higher minimum wage in real terms, more domestic lending, and schooling-related family benefits (Bolsa Família). In response to the international financial crisis, Brazil has adopted counter-cyclical measures that have encouraged investment and sustained household spending. Despite the higher government spending required during the crisis period, Brazil ended 2009 with a smaller budget deficit than the other G-20 countries.

Another crucial aspect of Brazil's development policy is environmental sustainability, which has taken on a cross-sector character and is now a concern for all spheres of government and business. Sustainable development is now a demand of Brazilian society rather than an item on government and private sector agendas. Switzerland's advanced industrial sector, sophisticated financial services, and long standing engagement with environmental issues, are enormous advantages that will enable it to play a more significant role in this virtuous cycle of the Brazilian economy.

Finally, I would like to briefly look at the positive momentum of relations between Brazil and Switzerland at government level. In this context, I would highlight the Joint Committee on Economic and Trading Relations (Comista Brazil-Switzerland), which has met twice, in October 2007 and March 2009, and is due to hold a third meeting in Bern in the first half of this year. Comista has provided an opportunity for bilateral discussions on a broad range of economic and trade issues. At the first two meetings, business representatives posed ideas and made suggestions on matters of their interest to be brought to the attention of government, and will likely do so again at the forum's third meeting.

The economic relationship between Brazil and Switzerland is therefore at a stage of growing bilateral flows of trade and investment, which corresponds to maturing dialogue between governments. Our countries are also developing closer relations on account of a series of shared values such as democracy, human rights and the pursuit of peace. The future of the Brazil-Switzerland relationship is even more promising than its past, and I propose that we invest in this promise.



Bern, February 2010