The opportunities for Italian companies in Brazil

Jul 3, 2019

In the article, Mr Graziano Messana talks about two relevant facts that will contribute to the opportunities on different business fronts for Italian companies in Brazil.  Enel’s extensive investment and the agreement signed between Mercosur and the European Union.

You can also see a little more about the Italian presence in Brazil here.

Two important events have happened in recent weeks that deserve special attention because they will contribute so much to the growth of the business that Italy will be able to develop. In Brazil, Italian investments reached an all-time high between 2018 and 2019 because, thanks to the mega-investment of Enel that has positioned itself as the first energy distributor and a major renewables player, according to data from the Brazilian Economy Ministry and a memorandum of understanding for the exchange of information signed between the most important countries, Italy has found itself in front of giants such as the US and China, leading the list of investor countries. Downstream of this consolidated information comes to a very important announcement and perhaps passed a little in the Italian media, which concerns the visit at the end of May of the global CEO of FCA and Jonh Elkann. With the global operation with Renault set aside, and that in Brazil it would have had a rather favourable terrain because Renault has only one factory in a region other than the ones in which Fiat has them, in the states of Minas Gerais and Pernambuco, the visit formalized for these two production units new investments for a total of 16 billion reais. This is the most significant investment made from the 1970s to the present day and this will of course favour all the induced Italian suppliers of Fca as happened in the past. Investments of just under 4 billion euros at the current exchange rate, they are therefore added to those of other large companies such as Enel or Buzzi Unicem itself, if we think of the private, without forgetting the very recent operations of Sace that financed 60 million dollars in Nexa and 300 million dollars in Braskem, operations carried out with the specific purpose of favouring the chain of Italian companies operating in the area of mining and chemical-oil&Gas. The further positive news comes last Friday with the historic signing of the EU-Mercosul agreement. The agreement, which had been under negotiation for 20 years, had been boycotted by the Lula and Rousseff governments, then Temer resumed negotiations and was placed on the current government’s agenda. On 4 June, Economy Minister Paulo Guedes made it clear at a meeting with the main Italian institutions and companies that the agreement was close to being signed and Brazil no longer wanted to remain a country closed to the market and free trade. Italy, and in general Europe, exports machinery, vehicles, pharmaceuticals and chemicals to the countries of the continent of South America (Mercosul). But the country most penalized, as it has historically discounted very high and sometimes prohibitive import duties, was always Brazil, which alone represents a greater GDP than all the remaining countries of The Mercosul. This opening is good for Italian companies that have niches of excellence and can see this new market a huge basin for their expansion. On the other, and I am talking about Brazil mainly, the products most exported to Europe are meat, soy, coffee orange juice. Despite the implementation time required to make this agreement effective, the overall situation is understood as a win-win for the two blocs. Opportunities on different fronts then for Italian companies on the one hand and the growth of Brazil on the other. All we need to do is enter the executive phase.

Original article in Italian.

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