Economy shrinks 0.27% in September, says BC indicator

Economic activity retracted 0.27% in September compared to the previous month, according to the Central Bank’s IBC-Br indicator, released this Tuesday (16). In the year, however, the index accumulates high of 5.88%.

The indicator shows a decline in the resumption of the productive sector in the third quarter of this year, with a drop of 0.14% compared to the same period in 2020. In the 12-month period up to August, the economy advanced 4.22%.

This is the second negative result in a row. In August, there was a drop of 0.29%. Last month, the BC announced that the retraction would be 0.15%, but the data was revised.

The data may differ from those previously reported as the series undergoes frequent revisions. The adjustments are usually residual, but, according to BC, in recent months the difference has been greater due to the shocks caused by the Covid-19 pandemic.​

The July data, for example, increased from 0.60% (before the adjustment) to 0.23% in the first revision. In this Tuesday’s publication, growth rose to 0.18% in the month. In June, the variation was even greater – it went from 1.14% to 0.92% in the September revision and to 0.23% last month. Now, it was 0.22%.

In March of this year, a month marked by new rounds of lockdowns due to the worsening of the Covid-19 pandemic, the economy shrank 1.77%, according to the indicator, but returned to growth in April, with 0.49%, and maintained positive numbers until July.

The number is calculated with seasonal adjustment, which removes specifics from a month, such as number of working days, to facilitate comparison with other periods.

After the start of the pandemic, the closing of businesses and social distance affected the economy. With the reopening and relaxation of the restrictive measures, activity started to recover.

In March of last year, when the virus arrived in the country, there was a reduction of 5.90% in the productive sector, as reported at the time, already under the effect of social distancing. After the last review, the variation dropped to 4.71%.

The worst result was registered in April 2020, when the economy fell 9.73% (9.87% with revision), the lowest level since October 2006 and the biggest drop between one month and another in the entire historical series, which started in 2003.

The IBC-Br measures the country’s economic activity and has been released since March 2010. It was created to assist in monetary policy decisions, as there is no other monthly data on the productive sector’s performance.

The BC indicator takes into account the performance of the main sectors of the economy: industry, agriculture and services.