The reduction by almost forty percent in investments by Brazil’s oil giant, Petrobras is expected to be the main cause for the shrinking of the Brazilian economy this year, concludes a study conducted by the Finance Ministry on Wednesday.
According to the study, released by the Ministry’s Economic Policy Department (SPE), the reduction in investments from US$37.1 billion in 2014 to US$25 billion in 2015 is expected to be responsible for at least a two percent contraction in the country’s Gross Domestic Product (GDP).
Analysts say, however, that the effects of the reduction in the oil and gas production chain as a whole should be greater than the effects of the state-owned company itself. One of the most affected is likely to be the shipbuilding sector.
“Petrobras’ internal crisis has bombed the shipbuilding sector, since the oil giant is the national shipbuilding industry’s main customer,” said Franco Papini, vice-president of Sinaval (National Naval and Offshore Industry Union) during a conference in São Paulo in early October.
According to Sinaval for the first time in fifteen years Brazilian shipyards laid off workers. Due to a reduction of investments and the corruption scandal, which has left the oil giant weary of undertaking any new projects, fourteen thousand jobs lost from December 2014 to June 2015, says the union.
The SPE officially forecasts a retraction of 2.44 percent this year, although financial institutions surveyed by the Central Bank for the weekly Focus Bulletin has the number closer to three percent.
According to the Ministry in the last few years Petrobras has been responsible for a significant part of the country’s investments. The study shows that from 2010 to 2014 the oil company was responsible for 8.8 percent of all investments made in Brazil, equivalent to 1.8 percent of the GDP.