Brazilian industrial production is still stuttering

Textile plant in Leme, São Paulo. Photo: Alf Ribeiro/Shutterstock

A new economic measurement by the Brazilian Institute of Geography and Statistics (IBGE) shows how 2023 has been a lackluster year for industrial producers. The sector posted a mere 1.2 percent annual growth rate in October, after a slim 0.3 percent monthly growth from September.

Markets expected the results to be better, with the consensus estimating a 0.4 percent growth rate monthly.

According to the institute, segments that are more affected by credit availability — such as vehicles, IT and electronic goods, and machinery — have fared worse.

According to credit protection agency Serasa Experian, 71.9 million Brazilians are in default, and the number has been on the rise for the past three months. Defaulting consumers have narrow possibilities to buy goods and services that require payments in installments — either by not getting an auto loan or by having already maxed out their credit cards, for instance.

The sector faces challenges from abroad — such as a weaker global economy and uncertainty from China — and local issues; despite a recent monetary easing in the Central Bank’s policy rate, Brazil’s benchmark interests remain on the restrictive side at 12.25 percent.

The production level of the Brazilian industry is only 0.3 percent above that of December 2022. According to IBGE research manager André Macedo, the numbers show that Brazilian industry is “moving sideways, revolving around the same level,” and “a clear indication of an industrial sector that is not showing greater dynamism or vigor.”