High Interest and Low Morale Don’t Dampen Brazilian Businessmen

Brazilian entrepreneurs remain disposed to invest to increase industrial production, despite the political crisis and the economic setting marked by high interest rates.

The Manufacturing Industry Conjunctural Sounding for July, released Friday, August 26, by the Getúlio Vargas Foundation, reveals that 59.6% of the 676 companies interviewed intend to invest more in 2005 than in 2004.

The total amount these companies plan to invest comes to US$ 19.01 billion (R$ 46 billion), 18.2% more than in 2004.

The entrepreneurs’ optimism also extends to the ratio between investments and sales. The ratio projected for this year is 11.1%, the highest in a decade, according to the Getúlio Vargas Foundation. The proportion last year was 10%.

The study also shows that in the intermediate goods sector (which produces inputs for industry), the sector that has accumulated the highest level of installed capacity in recent years. 60.4% of the entrepreneurs said they plan to invest more in 2005 than in 2004.

The chemical and metallurgical segments are standouts in this sector. In the durable consumer goods sector, 61.6% of the entrepreneurs interviewed said they plan to invest more this year than last.

The capital goods sector (machinery and equipment) also presented a good outlook for this year. The programmed investments for 2005 exceed last year’s by 20%.

It was only in the construction materials sector that entrepreneurs displayed less enthusiasm in their investment intentions for this year. Although 51.7% of the 58 companies interviewed said they planned to invest more, the overall amount, US$ 302.19 million (R$ 731 million), is 16.2% less than what they invested last year.

Agência Brasil

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