Brazil’s industrial output ends 2023 on strong note, above pre-COVID levels

SAO PAULO (Reuters) – Brazil’s industrial production rose for a fifth consecutive month in December, data from statistics agency IBGE showed on Friday, exceeding market expectations and finally surpassing pre-pandemic levels.

In Latin America’s largest economy, output was up 1.1% in December from the previous month, IBGE said, growing at its fastest pace since March and extending the positive streak in place since August.

Market participants polled by Reuters had expected a 0.3% increase.

Industrial output is now back above its February 2020 level, the statistics agency noted in a report, although still 16.3% below its all-time high in May 2011.

Production stuttered for most of 2023 as elevated borrowing costs took their toll but started to pick up in the second half of the year with the central bank easing monetary policy.

“Overall, this is a strong report, and leading indicators suggest the industrial sector will continue to contribute to growth over the first half,” Pantheon Macroeconomics’ chief Latin America economist Andres Abadia said.

“Survey data have been improving consistently in recent quarters despite many domestic and external challenges.”

Production growth in December was driven by durable goods output, which rose more than 6% from the previous month, IBGE said. Intermediate goods and non-durable goods production were also up, with capital goods the only area to post a drop.

Overall production in December also grew 1.0% from a year earlier, the agency said, well above the 0.1% growth forecast by economists polled by Reuters.

President Luiz Inacio Lula da Silva’s government has set “re-industrializing” Brazil as a priority and earlier this month unveiled an industrial development plan for the next 10 years aimed at boosting growth with state credits.