Ipea says economic crisis is beginning to subside.

Vitor Abdala, reporter for Agência Brasil - A survey released today (27) by the Institute for Applied Economic Research (Ipea) says that the economic crisis affecting the country is beginning to lose momentum. Despite this, there is still a long way to go for the country's recovery, according to the coordinator of the Ipea Conjuncture Group, José Ronaldo Souza Júnior. The data are included in the Conjuncture Letter, which evaluates economic data released by the Brazilian Institute of Geography and Statistics (IBGE).

According to Ipea, signs that the crisis is losing momentum can be seen mainly in the national industry. Furthermore, the devaluation of the real against the dollar, according to Ipea, benefits the Brazilian export sector, especially in the textile, timber, and footwear segments.

In addition to increasing Brazilian competitiveness in the foreign sector, the devaluation of the real is also stimulating import substitution in the production of some intermediate goods, that is, in the inputs used by the productive sector.

On the other hand, however, the devalued national currency makes the import of machinery and equipment more expensive, harming investments in the productive sector.

Unlike industry, the service and commerce sectors are still contracting. "Services tend to take longer to recover because they depend heavily on consumer income, and that income will take time to recover due to the employment situation," said Souza Júnior.

Income decline and rising unemployment have hampered the recovery of domestic demand for goods and services. "We see a long road ahead [for economic recovery], because when we look at confidence indicators, especially those of consumers, we see that they are still very pessimistic," the researcher stated.