Industrial production joins ailing metrics such as GDP and consumer spending that spell a bleak picture for Brazil’s economy after a negative Q3. Industry shrank 0.6 percent in October, extending a negative streak that now reaches five months. The sector is 7.8 percent below October 2020 levels, which was a low baseline to begin with.
The pandemic has caused a wide array of disruptions to production chains, and seven in 10 Brazilian industries have had trouble accessing inputs — whether that be due to shortages of raw materials or the sheer costs caused by currency devaluation.
Moreover, Brazilian industry is facing the effects of the water and energy crisis, as we explained in our latest Brazil Weekly newsletter. Short-term electricity prices are volatile and industries have seen losses caused by voluntary power consumption reduction programs. Moreover, the sector is braced for an upcoming hike in Petrobras gas prices.
On Thursday, GDP data placed Brazil into a technical recession, after a 0.1-percent skid in Q3. And October industrial production data shows that Q4 is not off to a great start.