######################################## #Written by David Tam, 1999. # #davidkftam@netscape.net Copyright 1999# ######################################## From tamda@ecf.toronto.edu Mon Jul 12 18:24:16 1999 Date: Tue, 2 Feb 1999 16:24:58 -0500 (EST) From: David Kar Fai Tam To: APS 424S Subject: #10-02/03/99-"Crisis hits Canadian exports to Brazil" The Globe and Mail, Thursday, January 28, 1999. B9. This article talks about how Brazil's financial situation has affected other parts of the world, and in particular, how it affects Canadian businesses. The Canadian government predicts a 25% decline in exports to Brazil. This is due to Brazil's decision to allow their currency to devaluate. Their currency is has lost 35% of its value so far. Over the past eight years, exports to Brazil have been on an increase, but this and subsequent years will face decreases. Grain exports will be hurt the most. Main exports to Brazil include printing paper, potassium chloride, and telecommunications equipment. Although exports to Brazil only account for 0.5% of all Canadian exports, Brazil remains the largest Latin American market. These forecasts do not appear to have altered Canadian company expansion plans. The currency situation in Brazil has caused a stir in the world market. A number of changes will take place. Canadian companies who had export markets in Brazil will face a tougher time due to the fact that their products will now cost more in Brazil. However, the same may be said for other exporters in other countries. Other countries will also face similar barriers. Exporters should also realize that this means that, besides losing a bit of market in Brazil, they may also face tougher competition in other countries. This is due to the fact that Brazil can now export very cheaply to other countries. As well, this problem is further compounded by the fact that other countries have lost a bit of the Brazilian market and will try to compensate by exporting more to other countries. To summarize, the direct and indirect effects of Brazil's financial situation will have a negative impact on Canadian exporters. It will affect both those who export directly to Brazil, and those who export to other markets where Brazilian companies compete.