Brazil ruled out as low-cost sourcing location

2 March 2007
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02 March 2007 | Paul Snell

Brazil is only a "bit-part player" in the low-cost country sourcing arena, according to HSBC's senior economist.

Mark Berrisford-Smith, of the bank's business economics unit, told delegates at this week's CIPS Trading with China, Brazil and India conference he did not believe that the South American nation was the equal of the emerging Asian locations.

"Brazil does not fit into the dynamic model of India and China," he said. "Brazil's economic growth is around 2.8 or 2.9 per cent - the UK's is 2.7 per cent."

Economic growth is around 10 per cent in China and around 7 per cent in India.

Berrisford-Smith also said that Brazil ranks only thirty-third in the list of the world's importers, one place above Luxembourg, and behind nations such as Turkey, South Africa and Singapore.

"[Brazil's] growth rates are not spectacular," he said. "It is not a superdynamic economy. It is not a manufacturing superpower. It is not the supplier we believe it to be."

He said the country's expansion is dependent on the high price of the raw materials it exports and that it would suffer if other countries increased production.

"The country needs to reduce its reliance on exports of crude products and increase its manufacturing ability," he said.

SMmar2007

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