Since the projects began in 2009, Brazil has gone through some major changes both economically and socially. Public concern and investigations relating to the use of public funds (from previous governments) have come under particular scrutiny as a result work has now ceased on the train line that was being constructed through the region.
Economically Brazil as a country has suffered a number of financial blows over the years which has resulted in the country losing its investment grade status, and causing inflation rates to rise to double digits. In relation to the value of the Brazilian Real (R$) it has also fallen steeply in regards to the value of the Euro.
All of these issues coupled with the wide scale closure of the Brazilian pig iron industry due to increased costs and reduced payments from China have severely affected the outlook of the project based on the original domestic focus.
As such GWD Forestry recommends to IFU holders that export markets now provide the best possible options at harvest in the companies opinion, as such the company has now started planning outside of the original scope of the project and those agreements signed at the start in order to export timber in the best interests of its clients.
This section has been provided in order to provide company clients with unbiassed information in relation to both the domestic wood markets, the Brazilian economic outlook, and recommendations for export.
Whilst individual IFU holders are free to direct GWD Forestry at any time as to their intentions at harvest the information contained in this section should be reviewed by IFU holders prior to making any decision due to the current situation within Brazil.
The Brazil Inflation Rate and exchange Forecasts below have been projected using an autoregressive integrated moving average (ARIMA) model calibrated using analysts’ expectations.