The challenges and way ahead in Brazil’s forest products, paper and packaging industries

By: Srilakshmi Preethi
Senior Research Analyst, Paper Packaging

25 Oct 2016

Abstract

Brazil is moving towards the worst recession since 1901 due to low economic activity and political crisis. Deteriorating investments, unemployment, high inflation (10.7 percent in Dec 2015) and currency devaluation have been major contributing factors. The country's currency, the real, has lost 35 percent of its value in the recent past. Brazil's economy is expected to shrink 3-3.5 percent in 2016, significantly lower than the previous 1 percent forecast by the IMF.

This raises several questions such as:

  • What will be the impact of this economic recession on the forest products sector? Will this prove positive or negative for the industry?
  • Has the crisis transformed the trade scenario of Brazil? How will it impact the pulp and paper manufacturers?
  • How will it impact the input costs for paper and board? Has it opened the doors for mergers and acquistions in the country?
  • Will the current crisis prevail and what can we anticipate from the Brazilian pulp and paper industry for the future?

Brazil being the 9th largest producer of paper, and 4th largest producer of pulp in the world (overtaking Canada in 2014), has substantial potential and opportunities in the global forest products sector. Though the current conditions might not be favorable, this may not prevail in the long term for the industry. Despite the current crisis, the packaging industry may sail smooth given its strong export markets, increasing plantation areas, new investments projects and global partnerships.

 

 

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