The Brazilian Central Bank is forecasting that economic growth in 2013 will reach 4 percent. In December 2012 the economy expanded by 0.26% compared to levels in November and this reflected the overall slowdown in the economy towards the end of the year.

In 2012, the Brazilian government acted to lower interest rates, cut taxes for industry and ease credit but these measures did not spark a recovery in the economy.

In recent weeks the government has been targeting the availability of consumer credit as it views a recovery in credit as a key element in its efforts to reverse the economic slowdown.

While several financial institutions foresee an expansion of consumer credit in the coming months, interest rates on consumer loans are very high and this dampens demand for credit.

Inflation worries emerge once again
According to the Brazilian Institute of Geography and Statistics (IBGE), the inflation rate surged in January recording the highest monthly variation since April 2005.

The January 2013 inflation rate at 2.25% was also the highest for the month of January since 2003. Over the past 12 months the inflation rate rose to 6.15%, well above the maximum of 5.8% registered for the previous 12 months.

Currency weakens slightly against the dollar
In January 2013, the average exchange rate was BRL 2.03/USD compared to BRL1.79/USD during the same month in 2012. The 2013 rate reflects a slight depreciation of the Brazilian currency against the US dollar.

Interest rates a key to recovery
A decision to hold the prime interest rate (Selic) at 7.25% was made by the Monetary Policy Committee (Copom) of the Central Bank (BC) at its last meeting.

Most financial analysts consider that the Selic rate should be maintained at its current level, at least during the first quarter of this year and that consideration should be given to lowering the rate to 7% in the second quarter if the economy does not show signs of recovery.

Removing bureaucratic hurdles will stimulate the timber sector
According to the Center of Industries of Wood Producers and Exporters (Cipem) the timber sector in the state of Mato Grosso is expected to grow tenfold over the next ten years due mainly to increased output from reforested areas and through improved forest management.

According to the Mato Grosso Reforestation Association (AreFloresta), the area of teak plantations in the state increased 20% between 2007 and 2010 and the area of eucalypt plantations more than doubled in the same period.

The supply of raw materials from plantations will more than compensate for the reduced harvest in the natural forest says the Association. At present the timber sector represents the fourth largest sub-sector in the state’s economy after agriculture, livestock and manufacturing.

In 2012, the income generated through trade in forest products increased 9% compared to 2011, from R$ 256.1 million to R$ 278.9 million.

It is expected that in 2013 growth will be higher than last year supported by the State Environment Secretariat (SEMA) project ‘Restructuring of Land Regularization and Environmental Licensing Procedures in the State of Mato Grosso’. This project aims to remove bureaucratic hurdles in the timber sector so as to stimulate expansion in the sector.

Acre State gets German funds to combat deforestation
The rate of deforestation in Acre State in the Amazon region has fallen by half over the past 25 years and the efforts of the state are a model for combating deforestation. Over the years the state has implemented an economic development model that includes forest protection and combating poverty.

For its efforts in the protection of the environment the German Government awarded Acre State euro 16 million to finance further environmental projects.

The contribution was forthcoming because the state administration is exploring the development of a REDD project, the international mechanism to financially compensate for the maintenance of tropical forests and mitigating greenhouse gases emissions.

The German donor has a specific programme called ‘REDD Early Movers’ to contribute to efforts to halt deforestation.

This is the first time project funding has been provided to a state administration in Brazil and it is anticipated that this effort will attract a lot of national and international attention since Acre is a focus of attention when it comes to deforestation in Brazil.

Sources familiar with the project say that the State Government will use much of the project funds to support an existing scheme called the System of Incentives for Environmental Services (Sisa), created by the government of Acre to eradicate deforestation.

Pine exporters performed well in January
In January 2013, timber products exports (except pulp and paper) increased 3.2% compared to values in January 2012, from US$ 163.9 million to US$ 169.1 million.

Pine sawnwood exports increased 6.2% in value in January 2013 compared to January 2012, from US$ 9.7 million to US$ 10.3 million. In terms of volume, exports increased 12.5%, from 42,300 cu.m to 47,600 cu.m over the period.

Exports of tropical sawnwood fell 16% in volume, from 29,800 cu.m in January 2012 to 25,000 cu.m in January 2013 and in value the decline was 3.4% from US$ 14.7 million to US$ 14.2 million, over the same period.

Pine plywood exports increased 23% in January 2013 compared to January 2012, from US$ 25.2 million to US$ 31.0 million. Plywood exports also increased by 21.5% during the same period, from 69,300 cu.m to 84,200 cu.m.

On the other hand, exports of tropical plywood dropped from 5,800 cu.m in January 2012 to 5,400 cu.m in January 2013, a 7% decline. There was no change in the value of tropical plywood exports for the same period.

Data shows that the value of furniture exports dropped from US$ 29.5 million in January 2012 to US$ 28.5 million in January 2013, representing a 3.4% decline.

Brazilian Furniture Project delivers positive results
In 2012, furniture exports to Mexico under the “Brazilian Furniture Project” were outstanding according to analysts.

Brazilian furniture exports to Mexico fell by 14% between 2011 and 2012 while during the same period companies participating in the “Brazilian Furniture Project” increased their sales by 43% to the Mexican market. This result proves the effectiveness of the export model which aims to provide greater visibility to the Brazilian furniture industry in key international markets.

Companies participating in the project also saw demand in other countries improve. Sales to the United States grew by 8% in 2012 reaching US$78 million, compared to US$72.1 million in 2011.

Another significant increase was recorded in sales of Brazilian furniture to Peru which jumped from US$ 21.5 million in 2011 to US$ 27.4 million in 2012, an increase of approximately 27%. Sales to Angola also rose 13%, reaching US$ 52.9 million in 2012 compared to US$ 46.8 million in 2011.

Countries such as Chile, Colombia, the United Arab Emirates, Russia and South Africa are also included in the list of target markets under the project.

Brazilian furniture industry seeking capitalise on success in Mexico
The Brazilian furniture industry participated in the latest fair "Expomueble Invierno" held in February in Guadalajara, Mexico.

"Expomueble Invierno" is a long running furniture trade fair which has been held for the past 32 years. The fair brings together more than 500 local and foreign exhibitors in an area of over 52,000 square metres and this year recorded more than 10,000 buyers and visitors.

Mexico is one of the most important overseas markets for Brazilian furniture and the industry was determined to participate in the fair to enhance the image of Brazilian furniture and consolidate the Brazilian presence in the Mexican market.

Price trends
The domestic market remains rather quiet and average prices in lira have not changed over the past weeks.


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