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Brazil Domestic Demand Heats Up and Industry Grows 6%

Brazil's autoparts Brazil's industry ended the first ten months of 2007 with an accumulated growth rate of 5.9%. Industry has expanded in all of the Brazilian states surveyed, except for Ceará, in the Northeast, where performance has remained stable.

To Denise Cordovil, an economist at the Industrial coordination of the IBGE (Brazilian Institute of Geography and Statistics), the growth was driven by domestic demand. The IBGE was responsible for the survey.

"Even though exports are still making a positive contribution, the industrial growth recorded from January to October is directly linked to the rise in domestic demand. Factors that encouraged industrial activity this year, such as growing investment, more available credit and the expansion of income and employment, contributed to the advance of national production over the course of 2007," says Denise.

In the assessment of the IBGE, the outlook is very positive, as four of the 14 locations surveyed have shown results higher than the national average: Minas Gerais (8.6%), Rio Grande do Sul (7.9%), Paraná (7.6%) and Espí­rito Santo (6.1%).

In the first three states, higher rates reflect the warmer domestic demand for durable goods (automobiles and auto parts), the recovery of the agricultural sector (especially agricultural machinery) and foreign sales of commodities (iron ore, sugar and poultry).

The states of São Paulo (5.8%) and Santa Catarina (5.7%) posted rates similar to the national average of 5.9%. The remaining growth rates range from 4.6%, for the industry of the state of Pernambuco, and 1.3%, for the state of Bahia.

From September to October this year, still according to the IBGE, the 2.8% rise in industrial production is a consequence of expansion carried out in plants in 13 of the 14 regions surveyed.

To that extent, the only exception was the state of Pernambuco, where production saw a 1.3% decrease. On the other hand, using the same basis for comparison, the state of Paraná was the only one that posted a double-digit growth rate: 13.6%.

Five other regions involved in the survey have also shown results higher than the national average of 2.8%: Rio de Janeiro (8.5%), Espí­rito Santo (6.6%), Amazonas (5.4%), Goiás (3.9%) and Bahia (3.0%).

In comparison with October of last year, the rates point to a positive outlook, with growth in all of the 14 locations surveyed, five of which recorded double-digit rates. The states of Amazonas (15.4%), Paraná (14.4%), Rio Grande do Sul (11.3%), São Paulo (11.1%) and Santa Catarina (10.6%) grew above the national average (10.3%).

Below the average for the country, but also posting high growth rates, were the states of Minas Gerais (9.8%) and Espí­rito Santo (9.2%). The remaining results were: Goiás (5.3%), Rio de Janeiro (5.1%), Pará (4.6%), Bahia (4.2%), Ceará (3.7%), the Northeast (3.4%) and Pernambuco (1.3%).

To the economist at the IBGE, data for the month of October attest to the dynamism of Brazilian industrial production. "The data for October show that industrial production has remained dynamic in the first ten months of the year, with most of the sector presenting significant growth rates.

"Although I am not able to make forecasts for the next two months, we have already noticed that, over the course of 2007, there has been an overall expansion in the segments and locations surveyed," says Cordovil.

Sugarcane Production

The IBGE estimates that annual production of sugarcane should total 561.8 million tons next year, the volume is 9.3% greater than in 2007, when 514.1 million tons were harvested.

Based on crop estimates for next year, the figures, disclosed Monday, December 10, show that the cropland should rise 8.3% over 2007, when a total of 6.7 million hectares of cane were planted. Next year, productivity should also rise. According to the IBGE, the expansion should be from 76,594 kilograms per hectare this year to 77,304 kilograms per hectare in 2008.

The increase in domestic and foreign consumption of alcohol and interest in Brazilian ethanol and sugar, both made from sugarcane, explain the estimate, according to technicians at the organization.

ABr

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