Brazil's industrial and agribusiness output slumped in the first half of the year amid the global economic slowdown, the government statistics agency said Wednesday.

The negative production figures were released even as renewed optimism sweeps Latin America's largest economy.

The IBGE agency said that industrial production dropped 13.4 per cent from the same period in 2008, mainly due to lower exports and a drop in sales of durable and capital goods.

The agency said agribusiness production dipped 5.4 per cent, also because of a drop in export volume and lower prices of agricultural commodities sold abroad.

A drought that began in the last quarter of 2008 in southern Brazil - the country's biggest agricultural production region - and lower sales of fertilisers, herbicides and pesticides also contributed to the result, the IBGE said.

There are growing signs that Brazil's economy is recovering from the global crisis in part because of tax breaks in the automobile, construction and home appliance sectors, increased government spending and easier access to credit for small businesses.

Brazilian stocks and currency have risen to levels not seen since September.

Normal growth

Late last month, President Luiz Inacio Lula da Silva said he was convinced "the worst is over".

"The Brazilian economy has grown, people are consuming and sales are up," Silva said. "All the signs indicate that Brazil is going through an extraordinary phase ... and that starting in 2010 we will resume normal growth."

But, Central Bank President Henrique Meirelles on Wednesday warned during a meeting in congress that "excessive euphoria that could lead to price distortions ... and unnecessary volatility" must be avoided.

- AP