GDP drops in 2020 revised from 3.9% to 3.3%

by

The drop in Brazilian GDP (Gross Domestic Product) in 2020, the initial year of the Covid-19 pandemic, was smaller than initially estimated.

After review, the downturn in the national economy went from 3.9% to 3.3%, informed this Friday (4th) the IBGE (Brazilian Institute of Geography and Statistics).

The result came after three consecutive years in the blue — the rises were 1.3% in 2017, 1.8% in 2018 and 1.2% in 2019. The 3.3% drop in 2020 is the biggest since 2016, when the low was also at 3.3%.

The biggest drop in the IBGE’s historical series, with data since 1996, took place in 2015. At the time, GDP dropped 3.5%.

The 2020 result reflects the impacts of the beginning of the pandemic. The health crisis forced the adoption of social isolation measures at the time.

The decrease in the movement of people brought down sectors dependent on direct interaction with consumers. This was the case for part of services, the main segment of the Brazilian economy from the point of view of supply.

“It was a very localized drop in services, especially in-person services, paralyzed during the pandemic, such as hotels, restaurants, cinema and entertainment, travel and domestic services”, pointed out Cristiano Martins, manager of goods and services at IBGE’s National Accounts.

In current values, GDP was BRL 7.6 trillion in 2020. The review was mainly due to the incorporation of new data on services, the institute said. The sector went from a drop of 4.3% to a lower of 3.7%, less intense.

The industry’s performance was also revised: from a 3.4% retraction to a 3% decline. The growth of agriculture in 2020 was higher, from 3.8% to 4.2%.

The GDP revision is a standard procedure of the IBGE. The updated numbers are part of the System of National Accounts.

The survey aggregates new data from the institute and from external sources, which are broader and more detailed, in comparison with the GDP disclosures made every three months.

Consolidation of results usually takes place two years after the reference period — in the case of 2020, the review was carried out in 2022.

“There are always revisions of the preliminary data in relation to the definitive ones, with more sources of information. However, in atypical times, such as the 2020 pandemic, they can be greater, a fact that occurred all over the world”, said Rebeca Palis, coordinator of IBGE National Accounts.

Household consumption, which represents more than 61.8% of GDP from the perspective of demand, fell by 4.5%. On the other hand, productive investment in the economy, measured by GFCF (gross fixed capital formation), totaled R$ 1.3 trillion in 2020, registering a fall of 1.7%.

The investment rate, which is the ratio between GFCF and GDP, was 16.6%. It grew 1.1 percentage points compared to 2019.

According to preliminary data from the IBGE, the GDP grew again in 2021. The increase was 4.6%, according to the statistics already available.

The advance last year came amid the return of economic activities thanks to vaccination against Covid-19. The consolidated result for 2021 will be released in 2023 by the IBGE.

For the year 2022, financial market analysts project a GDP increase of 2.76%, according to the Focus bulletin, published by the BC (Central Bank).

The assessment is that economic activity still shows reflections of reopening after the damages in the pandemic. There are also effects of the release of resources on the eve of the elections by the Jair Bolsonaro government (PL).

The current president was defeated in the election by Luiz Inácio Lula da Silva (PT), who is going to his third term from 2023.

You May Also Like

Recommended for you