MercoPress. South Atlantic News Agency

Brazilian production feels the impact of cheap imports and global slowdown

Food production in August declined in the inter-harvest period

Output at Brazil's mines and factories slowed in August, falling a seasonally adjusted 0.2% from July as production in the country's industrial sector suffered the impact of cheap imports and the sluggish global economy.

However industrial production rose 1.8% in August compared to the same month a year ago, the Brazilian Census Bureau, or IBGE, said this week. In the rolling 12-month period, industrial production climbed 2.3% in August versus a rise of 2.9% in the 12-months through July.

Brazil's manufacturing sector has showed signs of decelerating activity since June, undermined by a strong Real that had stoked imports of cheaper goods. The Brazilian Central Bank also attempted to tamp down domestic demand by implementing five consecutive interest rate hikes after prices started to spiral out of control.

In recent months, however, concerns have tilted toward growth. At the end of August, the Brazilian Central Bank surprised financial markets by reducing the Selic base interest rate by a half-percentage point to 12%.

The central bank cited concerns about the impact of Europe's debt crisis and sluggish economic growth on Brazil's economy in making the rate reduction.

In August, 11 of the 27 industrial segments measured by the IBGE survey showed declines when compared with July, the IBGE said. Food production declined 4.6% as the country moved between harvests, while printing and publishing slid 7.8%. Output of electronics and communications equipment tumbled 5.9% month-on-month.

In the year-on-year comparison, 17 of the 27 sectors showed growth, the IBGE said. Motor vehicle production advanced 5.8%, while printing and publishing advanced 17.2%. Output of machinery and equipment rose 5.6% and production of electronics and communications equipment was 10.7% higher year-on-year.