BRASILIA (Reuters – Brazil’s industrial output rose in March. However, the first quarter ended with a decline in production. This highlights the difficulties facing the sector in light of global problems and a domestic situation marked by inflation and high interest rates.

According to government statistics agency IBGE, industrial output grew by 0.3% between February and March, slightly more than the 0.2% rise projected in a Reuters poll.

It was 2.1% less than it was in February 2020 before the pandemic.

In March, production was down 2.1% compared to a year before. This is more than the 3.3% decrease estimated by the poll. According to IBGE, the production fell by 4.5% in the first quarter compared with the same time in 2021.

Andre Macedo is the research manager at the agency. He said that industry faces many challenges to bring back their production, including increased costs and scarcity.

He said that inflation had lowered disposable income, and interest rates were rising which made credit more costly.

Brazil’s central banks are leading an aggressive cycle of monetary tightening to control double-digit inflation. They expect to increase rates this week.

There was an increase of industrial production in March in all four main economic sectors, including capital goods. This growth exceeded 8% in February.

However, the output of semi- and not-durable consumer products fell 3.3% in March, snapping an expansion that had been three months.

Despite the sharply reduced industrial tax by the government, which is now facing legal challenges, the industrial sector still has not shown a strong performance.