Message of Swiss Ambassador to Brazil

Wilhelm Meier

Annual Report 2009; pag. 25

At the beginning of 2009, the world economy faced a deep downturn and was confronted with the lowest growth rates since World War II due to the acute financial crisis that had broken out a few months before, challenging global institutions, governments and the private sector as hardly ever before in recent history. In 2009 global output fell by nearly one percent and the volume of global trade in goods and services by approximately 12 percent. The temptation to apply subtle protectionist instruments had increased markedly in the context of the global economic crisis. Most governments however showed political wisdom and refrained from erecting protectionist barriers. During the crisis the authorities of Switzerland and Brazil took appropriate economic policy measures in order to spare their countries from the worst consequences. Switzerland and Brazil have been able to handle the crisis rather well.

The year 2009 was, nevertheless, still a hard year for both our economies, as a matter of fact, the worst in many, many years. With nearly 13% the Swiss overall exports of goods suffered from the biggest decrease since 1944! Regrettably, the bilateral trade between Switzerland and Brazil declined even more. According to the latest Swiss customs statistics, Swiss exports to Brazil dropped about 17%. And imports from Brazil dwindled abruptly by nearly a third. One must not overlook, however, that our bilateral trade had developed far above average in the years prior to 2009. After all, Swiss exports to Brazil were still higher last year than in 2007, and it is encouraging, that they show again an upward trend during the last few months.

On the other side, the first months of the global economic crisis appear not to have affected the Swiss direct investments in Brazil. According to the latest available figures of the Swiss National Bank, they amounted to 33 billion Swiss francs at the end of 2008, with Swiss companies still employing more than 105,000 people, making Brazil the sixth most important destination for Swiss investment abroad. This confirms the long-term orientation of the bilateral investment relations as well as the inherent confidence even in rough times.

Brazil very well deserved this confidence. Indeed, the Brazilian government as well as the Central Bank - after initial hesitation - took the appropriate measures stabilizing and stimulating the economy. Today, Brazil appears to have strengthened with the global crisis its international reputation, and plays a more important role in global and regional decision making, e.g. in the IMF, UN, G20.

Brazil's economic indicators, such as growth and employment rates, look actually rather pleasant compared to a year ago. Some factors of uncertainty for the economic development over the next years are still discernable, such as the foreign exchange development of the Real, the balance of the external accounts, increased public spending. While many forecasts of last year turned out to be over-pessimistic, it remains to be seen if projected growth rates of more than 5 % are not aiming too high. Concerning inflation, the Brazilian Central Bank has in the past adopted successful policies and is likely to do so also in the future. The year 2010 being an election year might impose some additional political logic on economic policy

I mentioned the Swiss companies' confidence into Brazil's economy. However we must not forget that mutual trust needs to be built on solid political foundations. Therefore it is crucial to continuously foster the excellent relations between Switzerland and Brazil. And that's exactly what has been done with regular high level contacts during the last year. One of the highlight was the signature of the bilateral agreement on scientific and technological cooperation as well as a corresponding action plan in Bern last September by Federal Councillor Pascal Couchepin and Brazil's Minister of Science and Technology Sergio Rezende. The call for common scientific projects has already been made and they are expected to start shortly. With the approach "science to market", the outcome of these research projects will eventually also profit the business community.

In October 2009 the bilateral agreement on legal cooperation in criminal matters, which was signed in 2004, could finally enter into force. Furthermore, Brazil's Justice Minister Tarso Genro also paid an official visit to Switzerland in November, where he met members of the Swiss Federal Council. Other additional routine contacts with Brazilian ministers have taken place during the past year. Also the second meeting of the Joint Economic Commission was organized in Brasilia in March 2009, and the next meeting is envisaged for later in the year. Other official meetings at the highest levels in 2010 are already being planned.

It is self-evident that one of the Swiss Embassy's most important tasks here in Brazil is to implement the decisions taken at the highest bilateral level. I am therefore extremely grateful, that for many years now, the Embassy could enjoy the Swisscam's valuable support in its endeavour to promote and protect Swiss economic interests in Brazil. In this regard, I also would like to further underline the existing fine cooperation between the Swisscam and the Swiss Business Hub (SBH) in their common effort to promote the bilateral trade as well as the advantages of Switzerland as an attractive destination for investments in Europe.

In the second half of 2009 global production and trade recovered due to the extraordinary policy stimulus. However, it would be over-optimistic to assume that the afterpains of the economic crisis are over. Therefore it will be crucial for Swiss business to persevere in its efforts to excel abroad and to compete successfully within the global market. The support of Swiss-Brazilian Chamber of Commerce and the cooperation among Swiss institution is consequently becoming more essential. We all know well that the Swiss business community can count on the never-withering support the Chamber.