Industrial production drops 0.7% in 2022 – 02/03/2023 – Market

Brazilian industrial production closed the year 2022 with an accumulated drop of 0.7%, reported this Friday (3) the IBGE (Brazilian Institute of Geography and Statistics).

With the result, the indicator remains below the pre-pandemic level. It is at a level 2.2% lower than in February 2020, before the health crisis. It also shows a level 18.5% below the series record of May 2011.

In the monthly comparison, industrial production was stagnant (0%) in December, compared to November.

This performance was in line with market estimates. Analysts consulted by the Bloomberg agency projected null variation (0%).

In 2021, industrial production had closed with an accumulated increase of 3.9%, after a drop of 4.5% in 2020 and a decrease of 1.1% in 2019.

“Much of the growth in 2021 is directly related to the significant drop in 2020, caused by the beginning of the pandemic. It advanced in 2021, but was influenced by a low base of comparison and did not overcome the losses of 2020”, said André Macedo, research manager at IBGE.

According to economists, the industry failed to show a more consistent performance last year due to a combination of factors that made consumption difficult.

On the one hand, inflation remained high on products such as food. On the other hand, high interest rates created an obstacle to the purchase of more expensive industrial items that depend on the granting of credit.

There has also been a migration from consumption of industrial goods to services that were paralyzed in the initial phase of the pandemic, analysts say.

In other words, this change would have reduced the share of household budgets allocated to buying products that leave factories.

The year 2023 tends to bring new challenges for the industrial sector. Economists’ projections point to a slowdown in economic activity in Brazil and threats coming from the external scenario.

The BNDES (National Bank for Economic and Social Development) under the government of Luiz Inácio Lula da Silva (PT), on the other hand, promises that it will focus on industry. The new management of the development bank has already spoken of the need for reindustrialization of the country.