Automotive production in Brazil lives its best July since 2013 to increase 8.4%

Sample of automotive production in Brazil. EFE / Sebastião Moreira / Archive

EFE

Brazil produced 266,371 vehicles in July, an increase of 8.4% compared to the same month of the previous year and what is the best July since 2013, the sector's employer reported on Tuesday.

The growth of automotive production in July, during a year in which there have been more setbacks than advances, shows a revival of the sector driven by domestic market sales and credit conditions.

In the accumulated year, production grew 3.6% from 1,680,169 units produced between January and July 2018 to 1,740,676 in the same period of 2019.

However, the optimism is "moderate" for the second half as explained by Luiz Carlos Moraes, president of Anfavea during the presentation of the results.

It is expected that factors such as the recent reduction of the basic interest rate to its lowest rate in 33 years (6%), and the approval of the reform of the pension and retirement system, with which the Government expects to save 251,000 million dollars in the next decade, help to revive the economy that after the crisis of 2015 and 2016 fails to take off in the South American giant.

"We have moderate optimism. We have to be careful, but there are elements in the current economy that can boost a second semester better," he said. According to the Anfavea report, in July there were 266,371 units between cars, light commercials, trucks, and buses, 20,730 more than those produced in the same month last year. In comparison with June, when 233,150 units were produced, production was 14.2% higher. The outlook was not positive for exports that in the seventh month of the year continued without progress, reflecting the economic crisis that Argentina is going through, Brazil's main trading partner in South America, a problem that continues to halt the purchase of vehicles from the South American giant.

Also read: Argentina's recession would be deeper this year: Central Bank

According to Anfavea figures, exports fell 15.3%, from 49,705 units sold abroad in the same month of 2018 to 42,115 in July this year.

However, the number of vehicles sent abroad rose 4.2% in July compared to June, thanks to Mexico and Colombia, where Brazil had significant growth, but they are still small markets, Moraes explained.

As for new vehicles registered in July this year, the number (243,614) rose 12% in the year-on-year comparison (217,509) and 9.1% compared to June (223,198).

The Brazilian car industry, one of the engines of the country's economy, is in the process of recovery after the deep recession in Brazil between 2015 and 2016 that led to the gross domestic product (GDP) losing seven percentage points.

However, forecasts for this year remain weak and according to financial market projections, the country's GDP will only grow 0.8% in 2019, after the 1% recorded in both 2017 and 2018.