Brazil’s industrial output remained unchanged in January, disappointing forecasts. Economists expected a 0.5% month-on-month increase, but production stagnated following three months of decline. Yearly growth was 1.4%, also below expectations. Analysts anticipate ongoing industrial challenges due to high interest rates and weakening demand.
In January, Brazil’s industrial output remained stable compared to December, as reported by the government statistics agency IBGE. This figure fell short of economists’ expectations, illustrating signs of an economic slowdown in the country. Following three consecutive months of decline, Brazil’s manufacturing sector appears to be under pressure from high interest rates, despite expectations of a robust 2024 overall.
Economists had anticipated a 0.5% increase in industrial production for January. However, while production increased in three of the four main categories monitored by IBGE, a decline in intermediate goods output adversely affected the overall index. Year-on-year, industrial production recorded a growth of 1.4%, but this was below the market’s predicted expansion of 2.3%.
Andres Abadia from Pantheon Macroeconomics remarked, “This was a poor start to the year.” He indicated that the industrial slowdown is expected to persist in the first quarter due to persistently high interest rates, weakening demand, and less favorable global growth conditions. With Brazil’s benchmark interest rate currently at 13.25%, the central bank is projected to implement a further increase of 100 basis points in their upcoming meeting to combat inflation.
In summary, Brazil’s industrial sector demonstrated unexpected stagnation in January, failing to meet growth forecasts. Despite some categorical gains, the overall industrial output reflects ongoing challenges from elevated interest rates and subdued demand. Economists predict continued slowdowns in the coming months, emphasizing the need for careful monitoring of the economic landscape.
Original Source: money.usnews.com
