Brazil Industry July 2016

Brazil

Brazil: Industrial production stalls in July

September 2, 2016

In July, industrial production increased a meagre 0.1% over the previous month in seasonally-adjusted terms, which marked a deterioration compared to the 1.3% expansion recorded in June and represented the lowest reading since February. However, the result beat expectations of a slight 0.2% contraction. Behind the slowdown were downturns in the production of capital and consumer goods, which recorded contractions.

In annual terms, industrial production fell 6.6%, which was below the 6.0% drop recorded in June. Widespread declines were recorded nearly across the board with 22 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 9.8% in June to minus 9.6% in July. 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 5.6% 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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