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Recession caused by the pandemic lasted two quarters; record drop in activity


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The recession caused by the Covid-19 pandemic was one of the shortest since the 1980s in Brazil, but it generated the sharpest drop in economic activity since then.

This is what a statement released this Thursday (2) by Codace (Economic Cycle Dating Committee), linked to FGV (Getulio Vargas Foundation) indicates.

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According to the collegiate, the recession caused by the health crisis lasted for two quarters. It started in the first quarter of 2020 and ended in the second of the same year.

In this interval, the GDP (Gross Domestic Product) accumulated a drop of 10.7%, the most intense in the historical series with data from the 1980s.

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“In other recessions we had a combination of factors, internal or external. This time [2020]it was a health crisis”, assesses Paulo Pichetti, a researcher at FGV Ibre (Brazilian Institute of Economics of the Getulio Vargas Foundation) and one of the members of Codace.

Created in 2004, the committee is considered a benchmark for determining the chronology of Brazilian economic cycles. It is composed of eight specialists from different institutions.

According to the collegiate, Brazil had ten identified cycles of recession until 2020. Four of them lasted two quarters, the shortest duration of the series, including the one generated by the pandemic.

The two most extensive cycles of downturn in economic activity totaled 11 quarters each: from the third quarter of 1989 to the first of 1992 and from the second quarter of 2014 to the fourth of 2016.

Until the arrival of the pandemic, the most intense drop in the series had been recorded in the 1980s. From the first quarter of 1981 to the first of 1983, economic activity accumulated a retraction of 8.5%, according to the committee.

After Covid-19 paralyzed businesses, Brazil’s GDP reacted amid the reopening of companies and vaccination against Covid-19.

For 2023, the scenario signals a slowdown in activity, according to Pichetti. “The description is of an economy full of challenges, both internal, such as the fiscal balance, and external. It is a scenario of deceleration, from what can be seen so far”, he says.

The Codace meeting took place on Tuesday (31). The following committee members participated: Affonso Celso Pastore (AC Pastore & Associados), Edmar Bacha (Iepe/Casa das Garças), João Victor Issler (FGV/EPGE), Marcelle Chauvet (University of California), Marco Bonomo (Insper ), Paulo Picchetti (FGV Ibre and FGV/EESP), Fernando Veloso (FGV/EPGE and FGV Ibre) and Vagner Ardeo (FGV Ibre).

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