The fall in the Brazilian real to a “more favorable” level this year has allowed manufacturers to boost exports even as global trade remains weak, Finance Minister Guido Mantega said.
“Brazil today is much more competitive, and I perceive that there was already an increase in manufacturing exports because of the new exchange rate, even with the adverse situation of world trade,” Mantega told reporters in Tokyo, where he is attending the annual meeting of the International Monetary Fund. “It’s a good start.”
President Dilma Rousseff’s government has imposed barriers on capital inflows and purchased dollars in the spot and futures markets to weaken the real and help manufacturers. The currency has weakened about 22 percent since August 2011, when the central bank began cutting interest rates, to 2.0426 per dollar. Even at this level, it remains highly valued compared to where it was a few years ago, Mantega said.
The central bank cut its benchmark Selic rate for a 10th straight meeting to a record-low 7.25 percent on Oct. 10, to try and revive the slowest growth among the major emerging markets. Exports fell to $20 billion in September from $22.4 billion in August.
The global economy needs “intermediary mechanisms” to help tide it over until policies and reforms such as the European Stability Mechanism to help steer the region out of the crisis are functioning properly, Mantega said.
“When all these mechanisms are up and running, we’ll have an excellent economy,” he said. “It will be a marvel. The question is whether we will survive until then.”
An inflation forecast of 5 percent this year, and 5.1 percent for 2013 are “reasonable,” Mantega said. Brazil’s annual inflation rate accelerated in September for the third straight month to 5.28 percent.