Weekly Report - 03 November 2011 (WR-11-44)

BRAZIL | Blame the Real? Latest economic data releases again suggest that Brazil’s productive sector is coming off the boil, and fast. The leading indicator of domestic manufacturing output, the industrial production index, fell more than expected in September, shrinking 2% month-on-month over August and 1.6% year-on-year over September 2010. The moving quarterly average was -0.6%, and industrial output has now shrunk for the last two quarters, according to the national statistics institute (Ibge). The latest result came on the back of an 11% month-on-month decline in the automotive sector, which accounts for a full 11% of the overall index. That was the worst result for the car sector since December 2008, when Brazil slumped, prompting the Lula government to take emergency remedial stimulus measures. The auto sector has a knock on effect on the rest of the productive sector, due its linkages with things like the steel, glass, plastics and paint sectors, among others.

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