IPEA: Brazil economic crisis starts to lose momentum

A report entitled Carta Conjuntura, released today (Jun. 27) by the Institute for Applied Economic Research (IPEA), says the economic crisis facing Brazil is starting to lose momentum, even though there is still a long way to go before the country is fully recovered.

According to José Ronaldo Souza Júnior, a group coordinator at IPEA, the signs are most clearly visible in the national industry. IPEA's analysis was based on the most recent figures from the Brazilian Institute of Geography and Statistics (IBGE), which indicate that Brazil's industrial production closed out April up 0.1% from March—the second positive performance in a row, with March having registered an increase of 1.4%.

Moreover, the depreciation of the real against the dollar, according to IPEA, benefits Brazil's exports, chief among them textiles, wood, and footwear. It has also stimulated the replacement of imports in the production of a few intermediate goods—supplies used in the productive sector.

Unlike industry, however, services and trade are still on the wane. “Services tend to take longer to recover, as it depends largely on consumer income, and that income isn't recovering any time soon, due to the employment issue,” Souza Júnior said.

The decline in income and the increase in unemployment have challenged the recovery of the domestic demand for goods and services. “We see a long way ahead of us, because we're looking at the indicators for confidence, especially those of consumers, and we see they're still very pessimistic,” he declared.

IPEA is a federal foundation linked to the Ministry of Planning, Development, and Management. It provides technical and institutional support aimed at devising and revamping public policies and development programs through research and assessment.

Translated by Fabrício Ferreira