Brazil Industrial Output Falls on Slowing Economy

By THE ASSOCIATED PRESS
Published: January 6, 2009
Filed at 3:26 p.m. ET
RIO DE JANEIRO, Brazil (AP) -- Brazilian industrial production fell the most in seven years in November as the global financial crisis sapped credit and demand for exports, the government said Tuesday.
Industrial output fell 6.2 percent over the same month in 2007, the steepest drop since December 2001, deepening the economic crisis' impact on Latin America's biggest economy, Brazil's national statistics agency said.
The results are further eroding the confidence of businesses and consumers already rattled by Brazil's weakening currency and slowing economy, government researcher Silvio Sales told the Agencia Estado news agency.
''2009 will be a year of sacrifice,'' Sao Paulo Federation of Industries trade director Roberto Giannetti da Fonseca told the Estado de S. Paulo newspaper.
Brazil's currency has lost more than 45 percent of its value against the greenback since August, now trading at 2.2 reals to the U.S. dollar. Exporters had hoped the sliding currency would boost demand for Brazilian goods, but a spreading recession has kept down sales in Brazil's two biggest markets, the European Union and the United States.
Exports are expected to drop 17.7 percent to $163 billion in 2009, the first decline since 2000, according to Jose Augusto de Castro, vice president of Brazil's Foreign Trade Association, known by its Portuguese acronym, AEB.
The decline will likely shrink Brazil's trade surplus 31 percent as the economic downturn deflates prices for Brazil's top commodity exports, including iron ore and soy, the AEB said.
Still, the surplus, $24.7 billion in 2008, will hover around $17 billion because domestic demand for imports is due to slide along with Brazil's own slowing economy, Castro said.
With expectations of declining exports and the need to bring in dollars, Brazil's government said Tuesday it planned to sell bonds in international markets, the first such action in eight months.
The Finance Ministry said in a statement it would offer 10-year notes in Europe and the U.S. No details were given on when the sales would take place or what amount would be offered.