Brazil Industry Posts Longest Streak of Gains Since 2012

Brazil’s industrial production rose for the fifth straight month in September, representing the longest streak of gains since 2012, as billions of dollars in fiscal stimulus spurs broad-based consumer demand.

Output rose 2.6% from August, above the median estimate for a 2.4% gain from economists in a Bloomberg survey. Industrial production increased 3.4% from a year ago, returning to pre-coronavirus levels, the national statistics agency reported on Wednesday.

Brazil Industry Posts Longest Streak of Gains Since 2012

Emergency government spending amid the pandemic has propelled sectors such as durable goods while also lifting investments, the central bank said this week. At the same time, factories have benefited from the roll-back in social distancing measures. Still, some analysts warn that an eventual reduction in government stimulus at year-end may weigh on the recovery going forward.

What Our Economist Says

“With a fifth consecutive monthly advance, Brazilian industrial production has finally recovered from its pandemic plunge. The significant rebound in the third quarter bodes well for GDP growth.”

--Adriana Dupita, Latin America Economist, Bloomberg Economics

Read more here

In September, production rose in 22 of the 26 sectors surveyed by the statistics institute. Capital goods output, which is considered an indicator of future investments, jumped by 7% on the month while durable goods surged by 10.7%.

Analysts surveyed by the central bank have pared bets of an economic contraction this year to roughly -4.80% from -6.50% at the start of July. Still, officials including Economy Minister Paulo Guedes have said that emergency spending must be limited as debt nears 100% of gross domestic product.

©2020 Bloomberg L.P.

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