FGV Ibre’s regional report shows region’s economy is outpacing national average growth, but industrial sector lags behind
09/18/2024
The Northeast region of Brazil is experiencing sustained economic growth, surpassing the national average in 2024, but its industrial sector still lacks dynamism and lags behind the country’s average performance. This assessment comes from Flávio Ataliba, coordinator of the Center for Northeast Development Studies at the Brazilian Institute of Economics of Fundação Getulio Vargas (FGV Ibre), who is also responsible for the Northeast Macro Regional Bulletin, released on Tuesday (17).
Mr. Ataliba states that the industrial sector’s issues in the Northeast are structural, and production levels have not yet returned to pre-pandemic figures. “The key takeaway is that the Northeast’s industry needs to become more dynamic. It still faces structural problems and is below the national level,” he said.
The newly released document compiles a series of economic data from the nine states in the Northeast, showing, based on the Central Bank’s IBC-Br index, that the region’s economy fell by 1% in June compared to the previous month, while Brazil as a whole saw a 1.4% increase. However, for the year to date, the Northeast’s economy has grown by 3.1%, compared to the national average of 2.1%. In contrast, the industrial sector’s performance is different, with the Northeast decreasing by 0.4% for the year, while Brazil as a whole increased by 2.6%.
Mr. Ataliba suggests a deeper analysis is needed to identify the main bottlenecks in the Northeast’s industrial sector. “Is it financing? Access to markets?”
The bulletin also cites data from the National Confederation of Industry (CNI) to highlight that industrial business confidence in the Northeast remains low. In July, it dropped by 2.2 points to 48.7 points. “According to the indicator, there is some resistance among entrepreneurs to invest and increase production in the short term,” the document notes.
In stark contrast, the performance of the services sector has been more positive. The Northeast Macro Regional Bulletin, using data from IBGE, shows that seven out of the nine states in the Northeast recorded an increase in the volume of services in June compared to May. Only Rio Grande do Norte and Alagoas saw a decline, the same two states that reported a decrease for the year to date.
The study also analyzed data from IBGE’s continuous PNAD survey and found that in the second quarter of 2024, the unemployment rate in the Northeast was 9.4%, a decrease of 1.7 percentage points from the first quarter of the year, which stood at 11.1%.
*Por Rafael Rosas — Rio de Janeiro
Source: Valor International