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Brazilian industry stuck ten years in the past
The Brazilian Institute of Geography and Statistics (IBGE) published the latest figures of Brazil’s industry, and the numbers are not inspiring: the sector grew by only 0.7% between January and February (seasonally adjusted), below the already low 1% expectation. Today, Brazil’s industrial output is on par with 2009 levels and nowhere near the bonanza of 2010-2014.
A few factors contributed to the poor results in past months. The Argentinian crisis has lowered the demand for Brazilian manufactured goods—especially cars. Unpredictable events such as the May 2018 truckers’ strike and the January 25 Brumadinho dam collapse also played a role. The latter had a huge
impact on the mining industry—pushing the result for extractive industries to -14.8%. But it would be a mistake to blame it entirely on the incident.
The fact is that the Brazilian economy is stuck in a vicious cycle. Growth is highly dependent on consumption. But, with a high unemployment rate, families are not buying more goods. Plus,...