|
Economic
activity continues pickup.
Economic
data releases continued to point toward a further pickup in economic
growth in the second half of this year, following up on a 3.6% Gross
Domestic Product (GDP) expansion registered in the first half this year.
According to the Fundacação Instituto de Pesquisas Econômicas (FIPE),
the seasonally adjusted weekly indicator of economic activity (IMEC),
which monitors economic performance in São Paulo, was up 6.2% in the week
from 8 to 15 August over the same period last year.
Declining national unemployment (down from 7.1% in August to 6.7%
in September) combined with increased domestic credit availability and
lower interest rates is driving consumption.
In fact, the key consumption-related indicator of the IMEC
registered a 13.3% increase for the same period, while electricity
consumption grew 5.2%.
Industry
humming along. Industrial production also continues to
evolve favourably. According to National Statistical Institute (IBGE),
seasonally adjusted industrial production grew by 5.2% in September over
the same month last year. Capital goods output grew by 24.0%, driven
by double digit growth in mechanical, electrical and transport equipment
production. Intermediate goods output expanded by 5.0%, while on the
downside consumer goods production contracted by 1.0 %, due to declines in
output of food, beverages and leather goods. However, industrial
production growth is slowing, owing to the higher comparison base in
September 1999, when economic recovery was beginning to take shape.
The growth registered in September was well below the numbers reported for
July (+8.7%) and August (+6.4%).
The
government believes that the economy is set to recover strongly in 2000
from last year’s slump, with growth anticipated to reach 4%, as strong
industrial growth and a consumption pickup drive the economic rebound.
Temporary
inflationary pressures abate. Inflationary pressures
observed in July and August have subsided. According to the Fundação
Instituto de Pesquisas Econômicas’ (FIPE) monthly consumer priced
index, prices remained stable in October (+0.01%), which brought down the
annual inflation rate to 6.2% from 7.4% in September. The 14.5%
increase in transportation costs and a 9.4% spike in education prices were
compensated by more moderate increases in clothing prices (+2.4%) and
personnel expenditures (+2.2%). Transportation prices are still
adjusting to recent hikes in government-managed oil prices, which are
trailing market developments.. Education prices were up as a result
of the beginning of the new school year. The inflation figures
released by IBGE reflect the favourable price movements. According
to IBGE’s 10 November release, monthly inflation inched up just 0.1% in
August, which brought the annual rate to 6.7%.
|
