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Brazil’s Industry Criticizes Interest Rates

Brazil’s industrial indicators for February, released yesterday by the National Confederation of Industry (CNI), show that the real salary mass in February was 8.07% greater than it was in February, 2004.

“In the comparison between the first two months of 2005 and 2004, one observes an increase of 8.74%, the highest rate of growth for the start of the year since 1995,” the study points out.


When it comes to total hours worked, the CNI’s indicators show a 0.91% reduction in comparison with January, but, since February had only 28 days and included the period of Carnaval, the decline in total hours worked reflected a seasonal pattern.


“Discounting this effect, there was a growth of 0.82%.”


Utilization of installed capacity indicates that industry operated at 80.6% of capacity, the same level as in January, when it operated at 80.7% of capacity.


Since 1992, when the survey was initiated, “one has not witnessed the start of a year with such a high utilization of capacity,” the CNI observes.


When he announced the results of the survey, the coordinator of the CNI’s Economic Policy Unit, Flávio Castelo Branco, criticized the government’s monetary policy, which he considers “a brake on industrial activity.”


In his view, raising interest rates never stimulates growth. “The longer interest rates remain high, the greater the damage to industrial activity,” he affirmed.


Castelo Branco pointed out that the figures for February are favorable in relation to January, but he observed that this is partly the result of the drop that occurred in January.


“When we take a look at the last three months, we can say that the economy is more or less at a standstill. February’s indicators are close to or slightly lower than November’s,” he remarked.


ABr

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