Brazil depends to a large degree on China´s demand for its ore. But that dependence is dangerous, economist Arthur Kroeber told a conference in the country. Demand will be high for the next five years, but then drop sharply, and cause trouble if Brazil has not diversified its economy.
From Latino Foxnews
Arthur Kroeber, a U.S. economist, said in a speech here Tuesday that China’s real-estate sector has already reached its peak and therefore Brazil “must find other growth mechanisms.”
Kroeber added that Brazil must be aware that the recent sharp rise in raw-material exports to China will come to an end and cannot pin its growth prospects on a boom period.
Driven over the past two decades by rural dwellers’ large-scale migration to the cities and urban residents’ desire to upgrade to more modern homes, China’s housing market may remain strong for some time but is eventually headed for a fall, the expert said.
He predicted that Chinese President Xi Jinping’s government will take steps to slow the pace of the downturn and maintain China’s construction industry afloat over the next five years, saying those policy actions also will keep demand for Brazilian steel stable.
China is the biggest market for iron-ore exports by mining giant Vale, Brazil’s second-largest company and the world’s biggest producer of that base metal, the main ingredient in steel-making.
“You have to be realistic. The demand for raw materials will never be the same,” Kroeber said, adding that “Brazil must seek out new opportunities and see where it can gain an advantage because the game is going to change completely.”
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