After Two Years of Decline, Rio Grande do Sul, Brazil, Grows 6%

Industry in Rio Grande do Sul, Brazil In Rio Grande do Sul, the southernmost Brazilian state, industrial activity grew 6.2% in 2007 and was the fourth greatest in 16 years of the Rio Grande do Sul state Industrial Performance Index (IDI-RS) developed by the Federation of Industries of the State of Rio Grande do Sul (Fiergs).

"Last year was marked by a return to growth in the sector and sales determined the good result, posting growth of 12.7%," said Fiergs president Paulo Tigre, on disclosing the research this February 6.

According to him, the improvement of domestic demand was a sign of the good agricultural crop, the reduction of interest rates, the volume of income and the expansion of credit.

The main contributions to this industrial performance came from the machinery and equipment sector (27%), garments (16.6%), vehicles (15.5%), basic ironworks (12.9%) and food (6.2%). The IDI-RS ends a two-year cycle of negative results.

"Since 2005, the industrial sector in Rio Grande do Sul had been living a process of deceleration and in the period accumulated retraction had reached 14.5%, pushing the activities in 2006 to the lowest level since 2001," explained Tigre.

Sales guaranteed good results for the year, with growth of 12.7%. The IDI-RS was also pushed by industrial purchases, which grew 8.5% in comparison with 2006.

"The recovery of the transformation industry could have been more vigorous, but the continuation of the appreciation of exchange rates throughout last year limited it," stated the Fiergs president, pointing out that the shoe sector, the one that employs the largest volume of people and that focuses on exports, has been most affected ending the year of 2007 with retraction of 0.1%.

Despite the good performance of production, the variables associated to the labor market did not present the same rhythm of expansion, reflecting difficulties faced by the sectors with the greatest volume of workers.

The level of occupation, which rose only 1.8%, restricted expansion of hours worked in production (3.2%) and of laborer remuneration (4.7%). The lowest level of employment was registered in the tobacco sector (-6.4%), followed by shoes and leather (-5.4%), furniture (-2.8%) and electronic and communication material (-4%).

According to the president at Fiergs, the industrial performance will have to grow around 10% in 2008 to reach the same level of activities in 2004. "The challenge is great, but the national and international scenery, despite the recent changes in perspectives, should continue appropriate for this recovery," said Paulo Tigre.

CNI

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