Swiss pharmaceutical company Roche said this week it will stop producing medicines at its Rio de Janeiro unit in Brazil, a new blow to a country whose economy appears to be in its most sluggish decade in 120 years. Roche said the move will take place within the next five years because that factory is not financially sustainable.
Several big businesses have shown concerns about the future of the once booming Brazilian economy. The country has hit strong headwinds since 2014, with few encouraging signs of a recovery since new President Jair Bolsonaro took office on January first.
Roche said its layoffs in Rio will only begin next year. Its medicines in Brazil will be imported once the manufacturing unit is shut down and the company will keep its administrative units in Sao Paulo and Goias states.
The company employs 1,200 people in Brazil, including 440 at the Rio factory. The unit produces drugs like anti-anxiety medicines Lexotan and Valium, tranquilizer Rivotril and sedative Dormonid.
Also this week airline Avianca Brasil, which filed for bankruptcy in December, announced the shutdown 21 of its routes in April and closure of its office at Rio’s international airport.
In February, carmaker Ford closed its truck factory in Sao Bernardo do Campo, outside Sao Paulo. More than 3,200 people worked in that operation when the announcement was made and most of them are expected to be laid off in November. Authorities are trying to find a buyer for the plant, but have failed so far.
Workers at the Volkswagen plant in the same city accepted a cut in their benefits just to keep their jobs, a rare move that the local union agreed with.
Several other companies in financial difficulties have suggested they will not make big investments anytime soon, including companies that in 2017 promised to make new hires because of more flexible labor laws approved by Congress.
The Getulio Vargas Foundation think tank published a study on Monday saying the average growth of the Brazilian economy between 2011 and 2020 could be the worst since it started measuring in 1901, at 0.9% a year. From 2011 to 2018, it has averaged 0.6% growth.
The once-bullish Sao Paulo stock market, meanwhile, is now jittery about prospects for a major overhaul of the pension system meant to help the economy improve. Far-right President Bolsonaro backs the measure, which would delay or trim benefits for tens of millions, but it faces increasing resistance in Congress.
Economist Andre Perfeito said in a research note to clients that “the longer Brazil’s economy remains weak, the more difficult it will be for Bolsonaro to get the reform approved in Congress.”
Brazil’s government has boasted that February’s job figure is a sign a that recovery could come after all. More than 173,000 jobs were created, it said, the best figure in five years. Still, almost 13 million Brazilians are unemployed, also according with government figures.