STRETCHED TO THE LIMIT

STRETCHED TO THE LIMIT

Consider the problems of a stunted adolescent whose sudden renewed growth indicates a previously unsuspected future in basketball, and you have an inkling of Brazil's recent trade infrastructure problems.

Even with the government opting for moderate 5 percent-a-year growth for the rest of the decade, shunning a return to the heady 7 percent-10 percent of the 1970s "economic miracle" years, the problems will continue.International traders dealing with Brazil were treated periodically late last year and early this year to horror stories of crowded post offices,

airports and ports, all inundated with a rising tide of foreign purchases and - less publicized - rising exports.

Pallets of imported air cargoes sat exposed for days on rain-soaked tarmacs before airport authorities installed temporary inflatable shelters, which immediately proved inadequate. Items as big as a Jaguar sports car regularly got lost in airport cargo terminals. Traffic overflowed Sao Paulo's Guarulhos and Rio de Janeiro's Galeao airports and seriously taxed some backup facilities.

Industries in the ring of satellite cities circling greater Sao Paulo began looking for alternative ports, as containers of import and export cargoes piled up on both sides of the bottleneck at Santos, Latin America's biggest port.

"It was like a kid outgrowing his clothes at a fantastic pace. Nothing fit," said Wilson Braun, Circle Freight International vice president for South America.

Ever since the 1970s and the days of the international petroleum crisis, Brazil has jealously guarded its trade surpluses, holding a heavy foot on the import brake and another on the export accelerator. The move toward an open, competitive economy in 1990, along with a massive anti-inflation program started in 1994, ushered in a whole new trade and industrial philosophy. The Real Plan of 1994 was instituted to liberalize the country's trade policies, increasing imports in the hope it would curb inflation by keeping domestic prices down.

The new fashion has been slow in gaining supporters in some quarters, even after trade performance improved during the second half of this year. Some economic analysts pointed in near terror at eight consecutive months of trade deficits between November and June. It was not what they were used to.

Government trade authorities still expect a deficit of $2.5 billion this year. It will be the first annual flow of red ink since a $2.82 billion deficit way back in 1980. The intervening 15 years have averaged almost $10 billion a year in surpluses.

The beneficial effect of the open economy on the overall trade picture has been less touted by the popular press.

Freed to seek cheaper and better-quality imports, Brazilian industries are pushing exports in an unprecedented growth wave. In September, those exports hit a 12-month record of $45.54 billion. Authorities expect them to approach $48 billion this year, compared with $43.54 billion in 1994 and only $31.62 billion in 1990. (See table) Imports are expected to reach $50 billion, bringing the total trade flow to $98 billion, 88.5 percent more than the $52 billion recorded in 1990.

To maintain the momentum, the government is preparing a package of export incentives, including new and expanded lines of credit for manufacturers, in order to improve Brazil's balance of trade, beginning in January. With their higher added value, industrialized products accounted for 73 percent of export receipts between January and July.

A "Policy Plan for Industry, Technology and Trade" being prepared by the ministry of industry, trade and tourism (MICT) anticipates cumulative 20 percent growth during the next four years, producing a gross domestic product of $670 billion at the end of that period.

Exports are expected to grow 48 percent through 1999, reaching $71 billion on the eve of the next millennium. Between exports and imports, Brazil should be moving $126 billion in international trade, 64 percent more than what is expected this year.

The MICT plan is not a change but a "deepening" of the economic opening already in effect since 1990, said Antonio Sergio Martins Mello, MICT industrial policy secretary.

To reach its goals, the government believes it needs only to attract more private investments, encourage technological transfers, stress improved product quality and added value and make more credit available to exporters.