What explains the 1% rise in GDP in the first quarter? see list

The 1% growth in Brazil’s GDP (Gross Domestic Product) in the first quarter of 2022 mainly reflects the effects of the reopening of the economy, analysts say. There were also stimuli from the external sector.

The following is a list of factors that led the indicator to advance compared to the fourth quarter of last year.

Return on services and consumption

The beginning of the year was marked by the effects of the lifting of restrictions on the movement of people. This movement of flexibility ended up creating space for the resumption of consumption of services, a productive sector that suffered from stoppages in the most critical phases of the pandemic.

Services that depend on direct contact with customers, such as bars, restaurants, hotels, events and passenger transport, were boosted at the start of this year. The segment as a whole was up 1% compared to the fourth quarter of 2021.

The IBGE calculations still assess GDP from the perspective of demand, that is, how goods and services are consumed. Household consumption rose 0.7% in the first quarter, in another reflection of the lifting of restrictions.

With the advancement of vaccination against Covid-19, more Brazilians have returned to seek leisure activities, such as travel, for example.

Appetite for agricultural commodities and rising prices

The beginning of the year was also marked by the global demand for agricultural commodities and the consequent appreciation of the prices of these products.

This, according to analysts, benefited Brazilian exports, which grew 5% in the first quarter, compared to the immediately previous three months.

Weakened basis for comparison

Despite the progress at the beginning of the year, the Brazilian economy still faces difficulties. So much so that the activity has not yet fully recovered the level before the crisis from 2014 to 2016. The weakened basis of comparison is another issue that helps to understand the recent rise, according to analysts.

higher occupancy

After the pandemic hit, more Brazilians are finding some kind of work. In the first quarter of 2021, the number of people employed was 87.1 million. In the same period this year, the contingent rose to 95.3 million (plus 8.2 million).

Analysts estimate that the return of more Brazilians to the job market also helped GDP at the beginning of the year, although average income remains fragile.

government programs

On the eve of the presidential elections and pressured by the population’s loss of purchasing power, the federal government tries to stimulate consumption through programs such as Auxílio Brasil. According to the coordinator of National Accounts at IBGE, Rebeca Palis, initiatives of this nature can generate stimuli on the GDP.

What plays against reaction

The 1% rise in the national economy came a little below financial market estimates. In the median, analysts consulted by the Bloomberg agency projected an advance of 1.2%.

High inflation and the cycle of high interest rates are seen as brakes for a more consistent reaction of the economy. Together, the two factors play against household consumption and business investments.

In fact, productive investments in the Brazilian economy, measured by the GFCF (Gross Fixed Capital Formation) indicator, fell by 3.5% in the first quarter. The result turned on warning signal among analysts.