The first couple of weeks of 2017 seemed to confirm optimistic forecasts projected in December, leading to a more encouraging pace for Brazil’s economic activity. The economic indicators from the last month of 2016 suggest that the results from the fourth quarter were surprisingly positive, showing that Brazilian economy is likely to stabilize in the first quarter.

According to previous indicators, economists estimate that industrial production grew around 3%, which is evidence the first signs of reaction after negative results from November. The production increase, with the largest share concentrated in the automotive sector, cleared a weak performance of the retail sector in the same period, which led Brazil Central Bank to revise GDP contraction estimates for the fourth quarter from -1.0% to -0.5%.

After four consecutive months of underperformance, economic recovery finally found a constant pace that, combined with monetary-easing policies, provides ground for businessmen to regain confidence.

According to MCM Consultants, vehicle production grew 40.6% in December as compared to the same month of 2015, and 14.5% in comparison to November. Corrugated cardboard, which serves as thermometer for the packaging industry, grew 3.3%. Preliminary data also indicates a reaction of steel production in the same period.

Services sector also contributed to economic recovery with a 1.4% leap over November, driven by corporate and transport services.

The appearance of positive signs indicates that Brazilian economy will maintain gradual recovery pace throughout 2017, setting a solid ground for more audacious moves in 2018.

 

Source: Valor Econômico, January 23rd 2017.