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article imageBrazil's industrial output down 10.9% on back of truckers strike

By AFP     Jul 4, 2018 in Business

Brazil's industrial production dropped by 10.9 percent in May as a result of a massive strike by truck drivers that paralyzed the country for 10 days, officials said Wednesday.

The drop was felt particularly by car makers, who saw output sink by 30 percent from the month before, and by food producers, who suffered a drop of 18.1 percent.

The fall in production is however not as bad as financial experts had feared, having warned of a drop-off of as much as 30 percent in the economic daily Valor.

It was the worst plunge in industrial production since an 11.2 percent decline in December 2008, when Latin America's largest economy was buffeted by the fall-out of the global financial crisis.

By comparison with May 2017, the drop measured 6.6 percent, the largest since October 2016 (-7.3 percent) when the country was feeling the effects of almost two years of recession, according to the Brazilian Institute of Geography and Statistics (IBGE).

In comparison with April, almost all sectors of the economy felt the pinch, with capital goods down 18.3 percent, consumer goods down 15.4 percent -- with a 27.4 percent drop-off in consumer durables -- and of 5.2 percent in intermediate goods.

In all, 24 of the 26 sectors examined lost ground month-on-month, with only the production of coke, petroleum derivatives and bio-fuels seeing a gain of 6.3 percent, and extractive industries up 2.3 percent.

The figures marked a sharp slowdown in the country's industrial recovery, which had grown to 2.5 percent in 2017 following a major recession.

The period from January to May had seen an overall rise of two percent against 2017, while the January-April period had witnessed a 4.5 percent leap in output.

Markets that had forecast an industrial growth of 3.8 percent this year cut their predictions to 3.17 percent on the back of the latest figures, according to the weekly Focus survey, carried out by the Central Bank.

The transportation strike, staged in protest at rising fuel prices, paralyzed huge swathes of the country, underscoring predictions of a slowdown in the country's economic recovery, which has already been hampered by political uncertainties ahead of October's elections and external instability.

The Central Bank this week reduced its estimated 2018 GDP growth figures from 2.6 percent to 1.6 percent.

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