June 29, 2020 / 12:15 PM / 5 days ago

Brazil industrial confidence posts record rise in June

BRASILIA, June 29 (Reuters) - Brazilian industrial confidence rebounded sharply in June, the biggest ever rise, on growing hopes for recovery in the second half of the year, but still consistent with levels associated with severe recession, a survey showed on Monday.

The Fundacao Getulio Vargas’s national industrial confidence index jumped to 77.6 in June from 61.4 in May, with the rise of 16.2 representing the largest month-on-month increase since the series began in 2009.

This brings the accumulated rise in the index over the last two months to 19.4 points. But that is barely half of the 39.3 point decline registered across March and April, FGV said.

“The results suggest that the worst moment has passed for industry,” said Renata de Mello Franco, economist at FGV-IBRE.

“(But) we are far from the levels prior to the start of the pandemic and there is high uncertainty regarding the next six months, which may compromise the speed of recovery,” she said.

At 77.67, the index is around levels seen in 2015 and 2016, when Brazil experienced one of its deepest ever recessions.

Brazil’s gross domestic product is expected to decline this year at its biggest ever annual rate due to the COVID-19 crisis, with the International Monetary Fund forecasting a contraction of more than 9%.

The central bank last week cut its 2020 industrial production forecast to -8.5% from -0.5% as predicted three months ago.

Reporting by Jamie McGeever; Editing by Steve Orlofsky

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