Industrial production in Brazil shrinks by 2.4% in January -IBGE

RIO DE JANEIRO, BRAZIL – Brazil’s industrial production contracted 2.4% in January 2022 from the previous month, reversing much of the 2.9% increase in December 2021.

This puts the industry 3.5% below the level before the Covid-19 pandemic outbreak in February 2020 and 19.8% below the record level reached in May 2011. Compared to January 2021, the decline was 7.2%.

The data come from the monthly industry survey released today (9) in Rio de Janeiro by the Brazilian Institute of Geography and Statistics (IBGE).

“We found that the month of January is characterized by the loss of momentum and the widespread profile of decline, as all major economic categories show a decrease in production, both compared to the previous month and compared to January 2021,” said the head of the survey, André Macedo, in a statement.

According to him, the expansion in December 2021 may be related to the anticipation of production, as January is a month characterized by collective vacations.

He noted that the negative behavior of the industrial sector in January is something that has been observed for some time, with 2021 having recorded eight negative rates.

“Even in the cumulative indicator of the last 12 months, in which the industry remains in growth with an expansion of 3.1%, progress is losing more and more intensity. In August 2021, the rate reached 7.2%. In September it declined to 6.5%, in October to 5.7%, in November to 5%, and in December to 3.9%,” Macedo said.

Compared to December 2021, 20 of the 26 industries studied recorded a decrease in production. Compared to January 2021, 18 recorded a decline.

“The industry has been affected by the disruption of production chains due to the pandemic, with the increase in production costs and difficulties in obtaining inputs and raw materials for the production of the final product being important features of this process. In addition, rising interest rates and inflation, together with a still high number of workers not in the labor market, contribute to explain the negative behavior of the industry,” assessed Macedo.

According to IBGE, the largest negative impacts between December 2021 and January 2022 were recorded by the automotive industry (-17.4%) and the raw materials industry (-5.2%), after increasing by 18.2% and 6%, respectively, in the last two months of 2021.

Compared to January 2021, these activities had the largest negative impact on the overall index, with a decline of 23.5% in the first month and 6.7% in the second.

“The motor vehicle sector is an important example of the unbundling of the production chain, as it has difficulty obtaining key inputs for the production of the final product. The mining sector, on the other hand, has seen its iron ore production severely affected by the rains in Minas Gerais,” said the research director.

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