Brazil's İndustrial Confidence Up For First Time İn 2014

In its first positive result of the year, the Brazilian Industry Confidence Index (ICI) rose 1.8 percent, data published Wednesday by Brazil's Getulio Vargas Foundation (FGV) showed.



The index rose to 82.6 points in October, compared to 81.1 points last month, when it sunk to its lowest level since March 2009.



The pessimism from the industrial sector this year has reflected fears about the Brazilian economy, which has remained stagnant, with 2014 GDP growth estimated at just 0.27 percent.



Silvio Sales, an economist for FGV, urged caution. He said that while the ICI rise was encouraging, "it does not change the overall picture showing that the indicator is developing at very low historical levels."



Sales also pointed out that October's confidence metric may have been pushed upward by Brazil's election. Dilma Rousseff on Sunday beat pro-business candidate Aecio Neves, extending her mandate by four years. However, the race was extremely close, and for much of the month Neves was tied with, or even ahead of, Rousseff in polls.



"This scenario could have excited entrepreneurs with a glimpse of a more favorable immediate future," said Sales.



Throughout the election, markets signaled their intense dissatisfaction with the Rousseff administration and interventionist economic policies, surging when the president dropped in the polls, and falling when her fortunes rose. 



The day after Rousseff's win, the Bovespa ended the day 2.77 percent down, while Brazil's currency, the real, depreciated 3 percent against the dollar to its weakest level against the American currency since April 2005.



The prospect of a possible win from business-friendly Neves, who had promised to make encouraging investment a priority, may have produced an artificial bump in October's ICI.



Sales added that November's results would indicate whether October's positive result was a temporary surge or the beginning of an upswing in confidence.



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