Services sector, the main GDP, increases 1.1% in the third quarter

The service sector, the main Brazilian GDP (Gross Domestic Product), had a high 1.1% in the third quarter of 2021, compared to the three immediately previous months.

Meanwhile, the industry was stagnant (0%). already the agriculture fell 8%, point to data released this Thursday (2nd) by the IBGE (Brazilian Institute of Geography and Statistics).

The decline in agriculture was a consequence of the end of the soybean harvest, which also ended up impacting exports. Soybean harvest is more concentrated in the first two quarters of the year.

“As it is the main Brazilian commodity, agricultural production tends to be lower from the second half of the year onwards. In addition, agriculture comes from a high basis of comparison, as it was the activity that grew the most during the pandemic period and, for this year, the perspectives were not so positive, in a year of negative bienniality for coffee and with the occurrence of adverse climatic factors at the time of planting some grains”, says the coordinator of National Accounts at IBGE, Rebeca Palis.

The growth of services was driven by other activities (4.4%), which bring together various services provided to families. “With the advance of vaccination against Covid-19 and the consequent increase in mobility and the reopening of the economy, families started to consume less goods and more services”, comments Palis.

From the perspective of supply, the service sector accounts for around 70% of the Brazilian GDP. It involves a wide variety of businesses, from small businesses to financial and educational institutions. It is also the main employer in the country.​

In the pandemic, the provision of services was shocked by restrictions that sought to curb the dissemination of the coronavirus. The impact occurred because the segment brings together companies dependent on the presence of customers, including bars, restaurants and hotels.

With the advance of vaccination against Covid-19, the outlook became more positive for the final stretch of the year. However, the soaring inflation and difficulties in the labor market challenge a more consistent recovery in the coming months. The two factors, together, reduce the population’s purchasing power.

In addition to consumers, service companies and industry also feel inflationary pressure. This is because items like Electricity and fuel became more expensive in 2021, driving up business operating costs.

The industry has an additional difficulty: the scarcity of inputs. The automotive sector, for example, came to halt production lines due to lack of items like chips. This shortage has been accompanied by the rising commodity prices for factories.

Agriculture, in turn, was hampered this year by adverse weather conditions. Drought and the frost record affected different plantations in Brazil.

The agricultural sector did not escape the rise in input prices either. Imported goods, such as fertilizers, became more expensive in the pandemic with the heated demand and the high dollar.