Brazil's Industrial Output Suffers Second Consecutive Monthly Decline
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Brazil's industrial sector experienced its second consecutive monthly decline in November, according to data released Wednesday and reported by Reuters. This indicates a potential cooling of the economy as the central bank implements a restrictive monetary policy to combat inflation.
Industrial production decreased by 0.6% in November compared to October, exceeding the 0.5% decline predicted in a Reuters poll of economists. The decline affected all four major industrial categories assessed. This follows a 0.2% drop in production during the previous month.
The contraction is attributed to a confluence of factors, including tighter financial conditions, heightened economic uncertainty, and the recent depreciation of the Brazilian real. Andres Abadia, chief Latin America economist at Pantheon Macroeconomics, highlights these pressures on the industrial sector.
"The outlook for the sector in the first half of 2025 is deteriorating, primarily due to tight financial conditions," Abadia stated. However, he also notes that delayed fiscal support and persistent domestic demand could lead to relative strength in specific sub-sectors.
Despite the recent declines, industrial production registered a year-over-year increase of 1.7% in November. This suggests underlying resilience but also underscores the need for continued monitoring given the recent negative trends.