Brazil's industry started the year with a general weakness in January production and the worst result in four months, with investment losses being the main factor.
Industrial production fell 0,8% in January compared to the previous month, according to data released Wednesday (13.3.2019) by the Brazilian Institute of Geography and Statistics (IBGE).
That is the weakest reading since September last year, when output contracted 1,9%, and wipes out the 0,2% gain posted in December.
Compared to the same month last year, there was a decline of 2,6%, the worst rate for the month of January since 2016 (-13,4%).
«Despite the change of government, nothing has changed for the industry. The expectations of entrepreneurs have even improved, but in practice this has not yet been achieved.»"said André Macedo, research manager at IBGE.
"The industry is starting 2019 practically unchanged compared to the 2018 picture," he explained.. The crisis in Argentina, a job market with almost 13 million unemployed and a level of confidence that has not yet been realized explain this situation for Brazilian industry.
In 2018, industrial activity lost momentum during a year marked by uncertainties surrounding the presidential election, a truckers' strike and a slow recovery of the labor market, in addition to a crisis in Argentina.
The industry recorded a contraction of 0,3% in the fourth quarter compared to the previous three months, weighing on the Gross Domestic Product (GDP) result in the period – the economy expanded by just 0,1% compared to the third quarter.
In the year-to-date, however, industry showed growth of 0,6%, while GDP closed 2018 with an expansion of 1,1% over the previous year.
Among economic categories, the highlight in January was the 3,0% contraction in the production of Capital Goods, a measure of investment, compared to the previous month, the third consecutive negative result.
Intermediate goods fell 0,1% while consumer goods fell 0,3% on a monthly basis.
The IBGE data also showed that, among the branches investigated, 13 of the 26 showed losses. The greatest negative influence corresponded to pharmachemical and pharmaceutical products, with a fall of 10,3%.
The Central Bank's research shows that economists expect the industry to expand by 2,80% this year, accelerating to 3,00% in 2020.
Source: Reuters
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