Study Shows Brazilian Industry is Continuing to Struggle with Output

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4th July 2014 12:14 - Industrial

Figures from Brazil’s government statistic agency, the Brazilian Institute of Geography and Statistics (IBGE), have shown that the nation has continued to struggle with industry output, with figures falling for a third consecutive month.

This is the first time the Brazilian industry has shrunk for three straight months since 2011. Over two dozen stimulus measures have been implemented by the government to address the country’s faltering output but they have so far failed to curb the downturn, with industrial production falling by 0.6% between April and May, and by 3.2% from the same month of last year. In total, output has fallen by 1.6% in the first five months of 2014.

The IBGE surveyed 24 industrial sectors and, of these, 15 retreated in May from April with electronics (-5%), metals (- 4%), vehicle parts and motors (-3.8%) and petroleum derivatives (-3.8%) receiving the steepest falls.

This industrial downturn resulted in the loss of 30,000 manufacturing jobs in May, whilst high inflation continued to persist and business confidence fell to its lowest level in five years.

It has also been suggested, by another private survey, that the manufacturing industry fell at its fastest pace in 11 months in June. It is expected that industrial production will shrink by 0.14% in 2014. The Brazilian economy as a whole is facing a tough time too, with projected growth for this year estimated at just 1.1%.

Neil Shearing, of Capital Economics Ltd, said: “It’s not even as though we can say there are three straight monthly falls, but there’s comfort in the detail of the data. The detail of the data is almost worse than the headline.”

In order to kick-start the economy Guido Mantega, the Finance Minister, has this week extended tax cuts on cars in order to stimulate demand.

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