LatinNews Daily Report - 23 November 2012

ECONOMY | CNI points up mismatch between GDP and employment. The discrepancy between the low GDP projections and the latest labour market figures underline very weak productivity levels in Brazil, according to Flávio Castelo Branco, chief economist at the national industry confederation (CNI).  Brazil’s rate of unemployment was just 5.3% in October, down from 5.4% in September and a historic low for the month in the current series (dating to 2002). Amid virtually full employment, wages continue to rise, with monthly incomes averaging R$1.787 (US$850) in October. Annual average wages to date in 2012 are up 4.1% over the same period of 2011. Yet the country is forecast to post real GDP growth of just 1.5% year-on-year in 2012, down from 2.7% in 2011. Low productivity means that even with slow growth this year, the economy can still generate employment, Castelo Branco said, but he warned that this could be at the cost of higher unemployment in the future, “because sustainable growth in economic activity in the long term requires productivity. And it [economic activity] is slow because of systemic costs and low investment”. Industrial production in Brazil fell 3.5% year-on-year in the first nine months of 2012.

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