Brazil Blames Interest Rates for 13% Decline in Industrial Sales

Industrial sales in Brazil grew 2.03% last year, less than in 2004, when the sector increased its sales by 15%. The figures that register this slowdown appear in the National Industrial Confederation’s (CNI) study, Industrial Indicators.

The CNI’s executive secretary of economic policy, Flávio Castelo Branco, attributes the slowdown to high interest rates and the appreciation of the real in relation to the US dollar.

Castelo Branco also suggests that sales growth in 2005 was disappointing compared with what was expected. "We began 2005 with very high expectations, generated by the growth in 2004. Over the course of the year, the economy cooled, and, despite the positive figures, there is an air of frustration," he affirmed.

Despite the weak sales performance, the industrial job market did not mirror this trend. Employment was up 4.18% in 2005, in comparison with 2004. Moreover, industrial workers’ purchasing power rose 8.10%, in comparison with 2004.

According to CNI economist Paulo Mol, workers are able to buy more as a result of the drop in inflation.

"Salaries were readjusted in 2005 in line with a high inflation rate [that of 2004], and since inflation [in 2005] was less than the salary readjustment, the hike in purchasing power was not wiped out. This difference is what leads to gains in purchasing power," he observed.

Industrial employment is expected to grow in 2006 as well, but at a lower rate than in 2005.

The CNI expects that industrial growth will accelerate in 2006, stimulated by lower interest rates.

"In 2005 the economy was mainly affected by the monetary policy practiced in 2004. What basically restrained the economy were the high interest rates. This was the chief factor that caused the currency to appreciate and the economy to decelerate.

"If the decline in interest rates intensifies in the early part of this year, it may begin to produce positive results in the second and third quarters of 2006," Castelo Branco commented.

Agência Brasil

Tags:

You May Also Like

43.7% of Brazilian Jobs Go to Women, a Slight Growth

Women’s participation in the Brazilian labor market increased in the country’s six major metropolitan ...

Brazil Expecting the World from Lula’s Visit to Japan

The Japanese government is looking forward to Brazilian President Luiz Inácio Lula da Silva’s ...

In Brazil, It’s Always Killing Time

The recent killings of homeless people in São Paulo led to politically correct indignation ...

Brazil to Install Detectors in Ports and Airports to Prevent Bird Flu

Brazil’s Minister of Agriculture, Roberto Rodrigues, affirmed that he will negotiate with the Infraero ...

Brazil’s Global Peace Ranking is Bad (74th). But the US’s Is Much Worse (82nd)

Brazil appears in 74th place in a list ranking peace and social justice in ...

United South America Will Change World’s Power Balance, Says Brazil

Brazilian President, Luiz Inácio Lula da Silva, upon inviting presidents of the South American ...

An American passport

Brazil, Drop the Visa Requirement and Let the Gringos In!

According to official Central Bank numbers released by Embratur, Brazil’s tourism authority, in January ...

Leônidas, the Black Diamond and the inventor of the bicycle kick

Brazil Has Been Dazzling in World Cups Since Leônidas in 1938

Whenever the Soccer World Cup is mentioned, the mind is boggled by moments of ...

Falklands War Hero Believed Killed in Combat Jailed in Brazil for Robbery

He was given for dead and honored in multiple ceremonies as one of the ...

Brazilian Senate Absolves Its President But Many Believe He’s Guilty

The Brazilian Senate narrowly voted Wednesday, September 12, to absolve the embattled senate president, ...

WordPress database error: [Table './brazzil3_live/wp_wfHits' is marked as crashed and last (automatic?) repair failed]
SHOW FULL COLUMNS FROM `wp_wfHits`