Timid industrial production recovery not enough to offset 2022 blow

Timid industry production recovery
Factory in Mogi das Cruzes, in the Greater São Paulo Area. Photo: Alf Ribeiro/Shutterstock

Brazil’s manufacturing industry grew by 0.1 percent in April, building on a sequence of three positive months, according to national statistics bureau IBGE. Still, the meager progress was not enough to offset the blow from the beginning of the year, with production still down 3.4 percent year-to-date.  

Over the past 12 months, the sector has contracted 0.3 percent and remains 1.5 percent below pre-pandemic levels. 

While the sequence of improvements shows some signs of recovery, propelled by the post-Covid economic reopening, the industry is still feeling the pressure of price spikes caused by higher interest rates and the scarcity of inputs. 

“Considering domestic demand, high interest rates make it harder to get credit and they curb investments. High inflation reduces family income and the labor market is not fully recovered yet, and income does not increase. Thus, families have fewer resources to ensure domestic demand can propel the production,” explains André Macedo, the manager of IBGE’s industry survey.