Brazil Industry August 2016


Brazil: Industrial production plummets in August

October 4, 2016

In August, industrial production plunged 3.8% over the previous month in seasonally-adjusted terms, which significantly contrasted the 0.1% expansion recorded in July and marked the worst result since January 2012. The result was below expectations of a milder 3.1% contraction. Behind the drastic drop were downturns in the production of intermediate and consumer goods.

In annual terms, industrial production fell 5.2%, which was a milder drop compared to the 6.4% decrease recorded in July. Widespread declines were recorded nearly across the board with 18 of the 26 categories that the Brazilian Institute of Geography and Statistics (IBGE) surveyed recording contractions. The categories with the biggest negative impacts were the production of mining and quarrying and of coke, oil products and biofuels.

Annual average growth in industrial production improved from minus 9.6% in July to minus 9.3% in August. Brazil’s economy has sunk into the worst recession in its modern history amid low prices for key exports, high inflation, political turmoil and depressed confidence levels.

The analysts surveyed by FocusEconomics for this month’s LatinFocus Consensus Forecast see industrial production falling 5.7% in 2016, which is up 0.1 percentage points from last month's estimate. In 2017, industrial output is expected to grow 1.8%.

Author: Angela Bouzanis, Senior Economist

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