Brazil: Growth Forecast Declines Due to Decline in Iron Production

The accident, which occurred on January 25 in a mine owned by the mining company Vale, led the company to stop producing 92 million tonnes of iron ore because of a court decision requiring it to close several of its mines.

As a result of this comparison, financial market badysts have reduced the GDP growth forecast from 2% to 1.61%.

"The extractive industry represents about 20% of the industrial GDP and this has an impact on the economy that forced the revision of the forecasts," Efe Alessandra Ribeiro, a macroeconomics and policy specialist from the consulting firm, told Efe Alessandra Ribeiro. Tendencia advice.

Its effects, recently warned the International Monetary Fund, could extend in some mines in the country and cause the "slowdown of new projects".

Industrial production in Brazil increased 2.2% in the first quarter of the year, mainly due to the slowdown in mining activities following the Brumadinho collapse.

The slowdown in production of the world's largest producer and exporter of iron ore has led to an increase in the international price of inputs by around 30%.

"Since the Brumadinho accident, the price of one ton of iron ore has risen by $ 20 or $ 30, which has increased production costs"explained Marco Polo of Mello Lopes, executive chairman of the Brazilian Institute of Steel.

The specialist pointed out the "risk of shortage" of the steel sector because of the decline in production, which could affect the rest of the production chain, such as the manufacture of machinery, equipment or electronic products.