Midwest leads growth since the pandemic, with Northeast in the bottom

Driven by agribusiness, the Midwest region is expected to be the one with the best economic performance in the 2020-2023 period, while the Northeast is expected to have the worst result among the five regions of the country, despite the large proportion of beneficiaries of federal and transfer programs. of income.

The data are part of a special study by Santander’s Economic Department on the regional economy, which will be released this Monday (12), with the bank’s projections for the GDP of all states and regions from 2020 to 2023. The latest official data from the IBGE is from 2019.

Based on projections and indicators already released, the institution estimates that the South and North will also grow above the national average in the period and that the Southeast will have the second worst result.

A Datafolha poll released on September 1 showed that presidential candidates who lead the way in voting intentions appear technically tied in the Midwest, North and South. In the other two regions, former President Lula (PT) is ahead of President Jair Bolsonaro (PL).

The Northeast was the only region that, in 2021, did not recover all the loss of GDP (Gross Domestic Product) verified in the first year of the pandemic. In part, because of the effect of plant closures in the automotive sector in Bahia, the region’s largest economy.

The weak results of retail and services also weigh. The latter, with the worst regional performance in the 2021-2022 biennium. According to Santander, the region’s economy has shown less sensitivity to the increase in federal income transfer programs than the North, where both sectors have better performances.

The Santander study —which does not address the electoral issue— projects that the North and Midwest should maintain above-average performance in 2023, based on the extractive industry and agribusiness, respectively. The lower sensitivity of these sectors to the economic cycle tends to minimize the impacts of a more contractionary monetary policy on these regions, according to the bank.

The institution considers a scenario in which agricultural commodity prices decelerate in the coming quarters, but should remain at historically high levels. In addition, the outlook is for a good grain harvest in Brazil.

“As much as the price is a little lower than what we saw throughout 2022, volumes tend to be good and this tends to support those regions that have greater strength in this sector”, says Gabriel Couto, economist at Santander.

The expectation is for stability in the South and Northeast and contraction of activity in the Southeast, more sensitive to the effects of high interest rates and supply problems in the industry. For Brazil, the projection is for a drop in GDP (Gross Domestic Product) of 0.2% compared to 2022.

“The Southeast economy, for having a large share of sectors sensitive to this more restrictive monetary cycle, such as industry and some important segments of the service sector, tends to have a worse performance than the national average”, says the economist.

In the 2020-2023 average, the South should be the second best performing region, with emphasis on Santa Catarina, with the smallest GDP drop in 2020 in the region, the third largest growth in 2021 in Brazil and an expansion of 1% expected for 2023 The North is in third place, as the extractive industry in Pará hampered the results, which should only improve as of next year.

Pará, Bahia and Maranhão appear among the three worst economic performances in 2021 and 2022. In 2023, these positions should go to Rio de Janeiro, São Paulo and Espírito Santo, which should register a drop in GDP. Contraction is also projected for Bahia, Pernambuco, Minas Gerais, Paraná and Rio Grande do Sul. Roraima should lead the growth ranking for three years (2021-2023).