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Brazilian Industrial Production Shrinks Slightly

Brazil's industrial production Brazil's industrial production saw a 1.3% reduction in August compared with the previous month, according to the Monthly Industrial Survey, disclosed this Thursday, October 2, by the IBGE (Brazilian Institute of Geography and Statistics). The accumulated expansion rate of industrial activity in the first eight months this year was 6%, and in the 12-month period ending in August, 6.5%.

According to the survey, more than half the sectors analyzed recorded negative results. Out of 27 sectors surveyed, 15 had negative results. The one that stood out most was chemical products, at -5.5%. Deflation was also recorded in the foodstuffs (-3.1%) and oil refining (-41%) sectors, due to interruption in one of the units.

Out of the industrial segments that recorded significant growth rates, the highlights were pharmaceuticals (4.9%), electronic material and communication equipment (3.9%), and automobiles (1%).

The IBGE survey also shows that the product category that had the most relevant reduction was that of intermediate goods (inputs), at -2.7%, the highest rate of decrease for the category since October 2001.

The semi-durable and non-durable consumer goods sector also recorded a negative rate (-0.3%), after having grown by 2.7% from April to July.

In turn, capital goods (machinery and equipment) remained stable (0.1%) and durable consumer goods recovered from the losses in July (-4.3%) to grow 2.1%.

Brazil-Argentina

The Local Currency Payment System (SML) established between the Central Bank of Brazil and the Central Bank of the Argentine Republic (BCRA) started October 2. The president of the Central Bank of Brazil, Henrique Meirelles, went to Buenos Aires, Argentina, to attend the opening ceremony.

According to Resolution #3,608, "the SML is a computerized system through which transfers of funds pertaining to revenues from Brazilian exports to Argentina and to the payment of Brazilian imports from Argentina, in reais [Brazilian currency] and Argentine pesos, respectively."

The resolution provides that it will be up to the Central Bank of Brazil to consolidate, on a daily basis, the figures concerning payments and receipts processed under the SML with the Central Bank of the Argentine Republic.

The Brazilian bank should then calculate the equivalent value in United States dollars and the net value to be transferred by the indebted central bank.

ABr

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