Ipea foresees 8.5% increase in industrial production
Folha de S. Paulo - 02/23/2008
The industrial production of the country may grow 1.7% in January, compared to December, according to the estimate released by Ipea (Institute of Applied Economic Research) yesterday. In relation to January, 2007, it is expected that the level of industrial productivity increases 8.5%. Should the estimate from Ipea be confirmed, the result of January will revert the two consecutive months of fall in the industrial production, taking the previous month as base for comparison. In December, the industrial production withdrew 0.6%, after falling 2% in November. In the view of Ipea, the fall in industry in the last quarter of 2007 represented a "small adjustment of the production". The study called "Monthly Industrial Production Ipea Index (Indicador Ipea de Produção Industrial Mensal)" indicates this fall has not reversed the tendency of growth in the industrial production. For 2008, Ipea still foresees strong growth, although less significant than the 2007's. The agency evaluates that the production will remain strong in the first quarter - due to the replacement of the stocks after the sales peak registered at the end of last year. Some factors, however, may affect the pace of the industrial production this year, says the agency. One of them is the high level of use of the installed capacity of the industry, which may become an obstacle to further increases in the production. Ipea points out, on the other hand, that the large volume of investments that has been done may ease the problem. Furthermore, a deceleration of the expansion of the credit is expected to occur as a result of the concern of the Central Bank with the excess of demand. Another factor that may jeopardize the growth of the industrial production is the possibility of increase of the interest basic rate at a longer term, which has been pushing up the cost of the loans made with longer terms. Ipea still expects a fall in the productivity of the sectors focused on exportation, because of a possible recession in the American economy.