Industry Leader Warns that Brazil Needs to Invest More

Brazil’s industrial production will have a lot of space in which to grow this year. This was the opinion expressed by Carlos Castelo Branco, manager of Economic Policy at the National Confederation of Industry (CNI).

In his view, the country’s current economic situation favors fresh investments, which will contribute to a gradual recovery in industrial growth in 2006.

Thursday, March 16, Castelo Branco presented data from the CNI’s Economic Indicators study for January. The study, which is conducted each month and involves 3 thousand companies, shows that Brazilian industry used a low level (79.1%) of its installed capacity in the first month of this year.

This is the lowest January index since 2002. The downward trend is also apparent after seasonal influences are factored out, according to the CNI.

In this case the percentage of installed capacity used in January, 2006, was 80.4%, the lowest level since November, 2003. Castelo Branco explained that both the sluggishness of the economy and the lack of investments contributed to the reduction in capacity use.

According to the economist, the figures referring to capacity use, together with the drop in the number of hours worked, reflect an adjustment in inventory levels. In his view, Brazil’s current situation is favorable.

He warns, however, that the country needs to take certain precautions. "The Brazilian economy has still not overcome its structural difficulties. Investment must be encouraged to ensure that growth rates in the future will be higher than the ones we have now."

Agência Brasil

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