In Q1'24, Brazil differed from the rest of the world and registered an increase in industrial production, advancing in the ranking of 116 countries built by the IEDI based on data from UNIDO (United Nations Industrial Development Organization). The reduction in our interest rates was crucial for this, boosting the branches whose markets are more sensitive to financial conditions. The recent interruption of the Selic's fall by the Central Bank calls into question the continuity of this movement.

The latest quarterly report published by UNIDO shows that the physical output of world manufacturing presented signs of slowing down in early 2024, due to the worsening situation in high-income industrialized countries and in the branches of greater technology intensity.

In Q1'24, global manufacturing output was practically stationary, registering only +0.1% in relation to the previous quarter, after adjusting for seasonal effects, implying a significant loss of pace in relation to the previous result (+0.9% in Q4'23). 

Compared to the same period last year, with the help of a more modest basis of comparison, the pace of expansion in Q1'24 was the same as in the final quarter of last year: +1.4%. 

The main change in early 2024 was in the group of high-income industrialized economies, especially in Europe. Its manufacturing production went from an increase of 0.6% in Q4'23 to a decrease of 1.3% in Q1'24 in relation to the previous quarter. In the year-on-year comparison, the intensity of the drop almost doubled, from -0.9% in Q4'23 to -1.6% in Q1'24.

Among emerging economies, China maintained a dynamism higher than the global aggregate, but with results very close to those of late last year. Compared to Q4'23, Chinese manufacturing grew +1.3% and against Q1'23, the increase was of +4.8%.

The group of Latin American and Caribbean countries registered a drop in industrial production, being the second region to lose the most in both comparisons. It was behind Europe only. In relation to Q4'23, it varied -0.4%, totaling 6 consecutive quarters without growth in the comparison with the immediately previous period. Against Q1'23, it fell 1.6%, in line with Q4'23 (-1.5%).

Unlike Argentina and Mexico, Brazil stood out for mitigating the regional situation, as our manufacturing production grew +1.0% compared to Q4'23 and +1.7% versus Q1'23, always with seasonal adjustment. 

It should be noted that this was the first quarter in which the Brazilian industry was above the rate for the sector's global aggregate (+0.1% against Q4'23 and +1.4% versus Q1'23). This is largely due to the phase of interest rates cuts and improving credit conditions, noting that the rise in interest rates in Brazil occurred before the rest of the world and therefore they also began to fall first.

As a result of this discrepancy in our favor, in early 2024, the Brazilian position improved in the ranking of manufacturing production built by the IEDI based on UNIDO data for 116 countries. 

In Q1'24, taking the comparison with the same period of the previous year, we were in the 45th position, that is, 15 places above the one held in Q4'23 (60th). The improvement is even more significant vis-à-vis our position in early 2023, when we were the 68th.

As a result, we started to appear in the upper half of the ranking, not far from the 1/3 of countries in the lead, with results above +2.2% in Q1'24 compared to Q1'23. We lagged behind industrial powers such as South Korea (+6.0%) and China (+4.8%), as well as India (+4.6%), the United Kingdom (+2.2%) and Malaysia (+2.0%), but outperformed countries like France (+0.4%), Mexico (+0.1%), the USA (-0.2%) and Japan (-4.4%).

Our improvement in the ranking has a lot to do with the fact that the country's recent interest rates cycle began before that of the rest of the world, as previously said. Last year, as we started to reduce them, we boosted production, especially in those branches of durable consumption and investment goods that are more sensitive to financial conditions.

The recent interruption of the fall in the base interest rate (Selic) by the Central Bank indicates, however, that this movement of Brazil rising in the global industry ranking may decelerate or even reverse, as a result of a more modest pace of growth in our industrial production, which, as we know, will still reflect the negative impact of the environmental disaster in Rio Grande do Sul.

The full text is available in Portuguese.