Report: Latin America To See Decline In Manufacturing Industry In 2009

A new report says that despite the steady growth in Latin America’s manufacturing industry, 2009 may bring a sharp decline, according to Supply & Demand-Chain Executive. The sector expanded the first three quarters of 2008, lead by Brazil and Argentina.

Manufacturing production growth will decelerate appreciably in 2009, according to the Manufacturers Alliance/MAPI “Latin America Outlook: 2008-2009” report, a biannual analysis that examines the latest trends and provides a near-term forecast for 16 major industries.

The report focuses on Latin America’s three largest economies — Brazil, Argentina, and Mexico — as these countries are responsible for more than 80% of the region’s manufacturing output. MAPI lowered its growth forecast for overall manufacturing output in Latin America in 2008 to 3.6% from its 4.9% forecast in the August 2008 report. The forecast also indicates that manufacturing production growth will ease to 0.9% in 2009, well below the 4.4% predicted in the previous analysis.

Brazil’s manufacturing production is expected to expand 4.9% in 2008, supported by strong activity in the first three quarters. The manufacturers of motor vehicles, other transport equipment, machinery and equipment, and non-metallic mineral products were the most important contributors to output growth in Brazil. Mexico’s manufacturing production is expected to increase just 0.9% in 2008, and Argentina’s will likely decelerate to 6.2% in 2008 from a strong 9% in 2007.

According to the report, manufacturing production in Latin America will slow further next year. The forecast anticipates Brazil’s output growth will weaken to 2.2% in 2009, influenced by sharp deceleration in the automotive, machinery and equipment, and other transport equipment businesses. Mexico is expected to expand by a meager 0.3%, and Argentina’s manufacturers are expected to post negative growth of 0.2%.

The report envisions growth in 14 of 16 industries in 2008 and growth in 13 of 16 industries in 2009. Three industries account for roughly 40% to 45% of the region’s manufacturing and, therefore, are keys to the forecast: food and beverages; motor vehicles; and machinery and equipment. The machinery and equipment industry should increase production 7.5% in 2008 but turn to negative growth of 0.6% in 2009.