Economic indicators signal resurgence of industrial growth

After languishing through more than two years in a row of downturn, the Brazilian economy, at last, is starting to show signs of recovery.  According to data released this week by the BC-Br (the Central Bank's Economic Activity Index), considered a "sneak preview" of GDP (Gross Domestic Product), the second half of 2017 is showing a positive scenario.  This because, considering the numbers for the month of August, the domestic economic activity level rose 1.64% compared with the same period in 2016.  Not only that, the expectation created is for the GDP to grow 0.72% by the end of this year.


The last official Gross Domestic Product data measured by the IBGE (Brazilian Institute for Geography and Statistics) had already pointed to GDP growth of 0.2% in the second quarter of this year, in comparison with the previous quarter.  Compared with the same quarter in 2016, there was already an increase of 0.3%, interrupting a sequence of 12 decreases.

We are still a long way from talking about growth, but the term 'recovery' is already a recurring one among economists and industrial managers.  In a score release on the federal government website, the Minister of Planning, Development and Management evaluates that "the breakthrough of 0.2% by the Brazilian economy in the second quarter points to promising economic activity for 2018."


A "closer" analysis shows that the turning point took place in March, when machinery consumption, which had fallen 37% between November 2014 and March 2017, registered a 9% rise.  This data is again taken from the IBGE, which in a Monthly Industrial Survey released in August, identified that industrial production in the country recorded growth of 0.5% in the first quarter of 2017, over the same period in 2016.  This rise was also fueled by capital assets (2.9%) In parallel, the Industrial Confidence Index (ICI), resulting from a survey performed by the Getúlio Vargas Foundation, moved 1.4 points in August 2017, registering 92.2 points.  

 

According to assessment by Tabi Thuler Santos, coordinator Industry Polling for FGV/IBRE (Getúlio Vargas Foundation/Brazilian Economic Institute), "the good news based on these numbers is that company assessments regarding the current situation have started to improve consistently and achieve the best bottom line since the beginning of the crisis in 2014."

 

Over the next few months, the Expectation Index (IE), tabluated in the same survey, increased 1.0 point, to 94.4 points. There was an increase in the ratio of companies who forecast greater production, which went from 29.1% to 34.2%, as well as an advance, on a smaller scale, in the percentage of companies which estimate lesser production, from
17.7% to 20.2% total. 

 

All the indicators, both economic as well as industry, strengthen the theory of Brazil's economic recovery, supporting an increase in imminent demand for the
capital assets industry, in metalworking as one example.

 

José Velloso Dias Cardoso, executive president of the Brazilian Machinery and Equipment Builders' Association (ABIMAQ), is betting on "attractive growth" in the metalworking sector starting in 2018, following suppressed demand since 2013.  "We're coming out of a period of three to four years of crisis, with low investment, and
there is a big demand for recovery of investments  starting this coming year." In his own words:  "it's already safe to say that the crisis is behind us; it's time to invest, time to go back to selling."






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