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RIO DE JANEIRO, June 2 (Reuters) - Industrial output in Brazil fell sharply in April from the previous month, adding evidence that the once-booming economy could be sinking into a deep recession this year.
Industrial production dropped 1.2 percent in April from March, government statistics agency IBGE said on Tuesday, slightly better than the median estimate in a Reuters survey of 25 analysts for a 1.4 percent decline.
Production retreated 7.6 percent in April from a year earlier, also not as bad as the median forecast for a 7.9 percent decline.
For years Brazilian manufacturers have struggled with hefty labor costs, high taxes and a faulty infrastructure. Now a surge in prices, rising interest rates and less government spending are weighing on the sector.
"We're running out of words to describe just how bad conditions are in Brazil's industrial sector," Neil Shearing, chief emerging markets economist with Capital Economics, said in a note to clients. "This is a grim report and suggests that Brazil's economy is on track to contract once again in the second quarter."
Output of durable goods and consumer products fell sharply in April from the previous month. A 5.1 percent drop in the output of capital goods in April points to weaker investment ahead as a shrinking economy zaps consumption.
Gross domestic product in Latin America's largest economy is expected to shrink 1.3 percent this year, according to a central bank poll of economists published on Monday.
Industrial output is expected to fall 2.8 percent this year, according to the same poll. Last year the industry contracted 3.2 percent. (Reporting by Rodrigo Viga Gaier; Writing by Alonso Soto; Editing by W Simon)