Message of Swiss Ambassador to Brazil

Wilhelm Meier

Annual Report 2010; pag. 23

The year 2010 turned out to be a true comeback year after the global financial turmoil of 2008 and 2009. This is especially true for the Brazilian economy. After some early signs of strong recovery in 2009, Brazil posted a record growth rate of 7.8% in 2010, its highest since the 1970s. After a weak previous year in which GDP shrank by 0.6%, the Brazilian economy is showing renewed vigor. Unemployment is falling steadily, financial inflows are building ever higher international reserves, and more and more consumers are rising into the middle class and contributing significantly to steady growth.

On the flipside of these bright developments, there are some signs of overheating. With inflation on the rise, the Central Bank is tightening interest rates, thus adding to the effect of the overvalued Brazilian real on competitiveness for exports, particularly manufactured goods. Many people fear that there may be a process of deindustrialization, to some extent at least. The government is taking measures to counter this trend and I am confident that it will resist protectionist pressure, as it has in the past. In general, we expect President Dilma Rousseff to keep to the same macroeconomic course as her predecessors.

Although there are obstacles on the road ahead, the outlook for the Brazilian economy is encouraging. Experts are predicting a growth rate of 4 to 5% for 2011. The Swiss economy is also performing well, so we may be optimistic in relation to the development of our bilateral relations. After our bilateral trade plunged in 2009, imports and exports recovered well in 2010 and have almost reached pre-crisis levels. Swiss direct investments in Brazil remained strong too. The latest figures from Brazil's Central Bank show that Switzerland invested more than USD 6.4 billion in Brazil in 2010, and was the third biggest investor in that year.

Swiss companies have a long record of interest in Brazil and confidence in its future. Nestlé, for instance, is now celebrating the 90th anniversary of its business in Brazil. Nowadays, more Swiss companies - especially small and medium sized enterprises - are developing the Brazilian market, and many of them are making direct investments. As we strive to cultivate the business environment for our companies, being well aware of the predominant and active role of the public sector in the Brazilian economy, we believe Switzerland and Brazil must extend and deepen their excellent bilateral relations even further.

I am pleased to note that several high level contacts took place during the past year. At the WEF 2011 in Davos, Swiss President Micheline Calmy-Rey met with Brazilian Foreign Minister Antonio Patriota for bilateral talks, strengthening our relations in the framework of our strategic partnership. At the end of August 2010, Federal Councillor Didier Burkhalter made an official visit to Brazil accompanied by Mauro Dell'Ambrogio, State Secretary for Education and Research, and a high-level delegation representing Swiss scientific and academic circles. The delegation met with ministers Sergio Rezende (Science and Technology), Fernando Haddad (Education), and José Gomes Temporão (Health), as well as other officials and scientific figures, and Swiss business leaders. Through these contacts, scientific cooperation between the scientific communities gathered further momentum.

In July 2010, the Swiss State Secretary of Economic Affairs, Jean-Daniel Gerber, visited São Paulo, Brasilia and Rio de Janeiro, where he held discussions with Miguel Jorge, Minister of Development, Industry and Foreign Trade, and representatives of Swiss companies in Brazil. The talks covered i.a prospective agreements for a trainee exchange program, agricultural matters, double taxation, and specific issues pertaining to the pharmaceutical and watchmaking industries. Finally, in December 2010, the third meeting of the Joint Economic Commission took place in Berne and further deepened the July discussions. In the tax field, long-stalled negotiations on a double taxation agreement were reopened last September and a successful conclusion will be of great importance for Swiss and Brazilian investors.

Once more, the Swiss-Brazilian Chamber of Commerce has played a very supportive role in promoting Swiss economic interests in Brazil. Swisscam is a well known cornerstone of Swiss presence in Brazil and a valuable forum for business contacts. So I can only emphasize once again how much I appreciate the excellent cooperation between the Embassy and Swisscam, as well as the Swiss Business Hub (SBH), in the common effort to foster bilateral trade and promote Switzerland as an attractive business partner for Brazil. I look forward to a continuing and efficient collaboration for the benefit of the Swiss economy and solid Swiss-Brazilian business relations.