Brazil Industry Blames Economic Downturn on High Interests

Employment in the São Paulo industrial sector rose only 0.38% in May, after rising 0.47% in April, according to a survey by the state industrial confederation (Ciesp).

According to the Ciesp Economics Department director, Boris Tabacof, “The numbers confirm a downward tendency that has been apparent for a few months now and show that we are going through an economic slowdown.”


Employment rose in the Food and Alcohol sectors (the latter got a boost from the sugar harvest). It fell in the Textile and Footwear sectors, which are strong exporters and subject to problems with the exchange rate. In the last six months the Brazilian real has risen sharply against the dollar.


The final employment balance between firings and hirings for the month of May presented a total of 7,428 new jobs. That is only half of the number of jobs created in May 2004 (14,569).


For the year, the cumulative rise in employment is 40,116, compared to 45,379 during the same period in 2004.


Boris Tabacof says there is a direct link between interest rates (which the government began to raise in September 2004) and the downturn in employment in São Paulo.


He declared that the interest rate is an additional factor in production costs, harming the state’s industrial sector which accounts for 33% of Brazil’s GDP.


ABr – www.radiobras.gov.br

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