February 1, 2018 / 12:35 PM / in a year

UPDATE 1-Brazil industry expands in 2017, first in four years

 (Adds details, context)
    By Bruno Federowski
    SAO PAULO, Feb 1 (Reuters) - Brazil's industrial output
expanded in 2017 for the first year in four due to a strong
pickup in auto production, suggesting manufacturers kicked off
the new year on a stronger footing.
    Industrial output rose 2.5 percent last year from 2016,
official statistics agency IBGE said on Thursday, the largest
yearly increase since 2010. 
    Production grew 2.8 percent in December from November,
surpassing even the top estimate in a Reuters poll of
economists. The median forecast was a 1.3 percent increase.
    The outlook for Brazilian manufacturers has turned favorable
as borrowing costs fall and growth in Latin America's largest
economy looks set to shift into a higher gear this year.
    Brazil's deepest recession in decades left industrial
companies grappling with high debt loads and idle capacity, but
booming car exports brightened their fortunes last year.
    That trend looks set to continue in 2018. Carmakers forecast
another strong year of production, while record-low interest
rates reduce funding costs and cheapen investments.
    Although a stronger global economy and a more favorable
exchange rate have lifted demand for exported goods, Brazil's
service sector is still contracting. An index measuring its
activity has posted annual declines for each month since April
    Economists forecast Brazil's gross domestic product will
grow in 2018 at its fastest pace in five years as low interest
rates and contained inflation prop up consumer spending and
capital expenditures slowly recover.

 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn)
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