Brazil’s industrial output unexpectedly contracted for a second straight month in April even as the government steps up measures to boost economic growth.
Output fell 0.2 percent in April after dropping 0.5 percent in March, the national statistics agency said today in Rio de Janeiro. Analysts expected output to remain unchanged from the previous month, according to median forecast from 48 analysts surveyed by Bloomberg. Output declined 2.9 percent from a year ago.
The central bank reduced yesterday the benchmark interest rate to a record low 8.5 percent in an attempt to revive growth that is recovering slower than the government initially anticipated. Finance Minister Guido Mantega said that the recent weakening of the real, the worst performing major currency this year, will help protect local manufacturers from foreign competition.
The real strengthened 0.3 percent to 2.0092 U.S. dollar at 9:08 a.m. local time and is down 7.1 percent since the start of year.
Last week the government eased reserve requirements to free as much as 18 billion reais for lenders to grant automobile loans. Mantega also cut taxes to reduce car prices by as much as 10 percent and trimmed a levy on consumer goods.
Analyst lowered for a third consecutive week their growth forecast for this year and now expect the world’s biggest emerging market after China to grow 2.99 percent, according to a central bank survey published May 28.
Factory output in April fell in 13 of 27 sectors, led by a 3.7 percent drop in the food industry. Production of capital goods, a barometer of investment, rose 1.9 percent.
The yield on interest rate futures contracts maturing in January 2013 declined 10 basis points, or 0.10 percent, to 7.87 percent.