Brazil’s GDP has a negative variation of 0.1% in the 2nd quarter compared to the first three months of 2021, below expectations


SÃO PAULO – Brazil’s Gross Domestic Product (GDP) registered a negative variation of 0.1% in the second quarter of 2021 compared to the first quarter of 2021. This result indicates stability and comes after three consecutive positive quarters of economic growth . In current values, GDP, which is the sum of the final goods and services produced in the country, reached R$ 2.1 trillion.

The data, in turn, represented an increase of 12.4% compared to the same period last year. The numbers were released this Wednesday (1) by the Brazilian Institute of Geography and Statistics (IBGE).

The indicator came out below expectations. The expectation of economists consulted by consensus Refinitive was a 0.2% increase in Brazilian economic activity compared to the first quarter and a 12.8% increase in the annual comparison basis.

With the result released this morning, the Brazilian economy advanced 6.4% in the first half. In the last four quarters, it accumulates an increase of 1.8%, and in comparison with the second quarter of last year, it grew 12.4%. GDP remains at the level from the end of 2019 to the beginning of 2020, the pre-pandemic period, and is still 3.2% below the highest point of economic activity in the historical series, reached in the first quarter of 2014.

Agro and industry in decline

According to IBGE, the performance of the economy in the quarter comes from the negative result of agriculture (-2.8%) and industry (-0.2%). On the other hand, services advanced 0.7% in the period.

“One thing ended up compensating for the other. Agriculture was negative because the coffee harvest was included in the calculation. This played an important role in the second quarter. The coffee harvest is in a negative biennial, which results in a significant retraction in production”, explains Rebeca Palis, coordinator of National Accounts at IBGE.

Industrial activity also declined due to declines of 2.2% in manufacturing and 0.9% in electricity and gas, water, sewage and waste management activities. These falls offset the 5.3% increase in extractive industries and 2.7% in construction.

“The manufacturing industry is influenced by the effects of the lack of inputs in the production chains, as is the case of the automotive industry, which deals with the lack of electronic components. It is an activity that is failing to meet demand. In the electric energy activity, there was an increase in the cost of production due to the water crisis that increased the use of thermoelectric plants”, adds Rebeca.

In services, the positive results came from almost all activities: information and communication (5.6%), other service activities (2.1%), commerce (0.5%), real estate activities (0.4%) , financial activities, insurance and related services (0.3%) and transport, storage and mail (0.1%). Administration, defense, public health and education and social security (0.0%) remained stable.

“Almost all components of services grew, with emphasis on trade and transport at the interannual rate, which were the activities most affected by the pandemic and which are now recovering more,” he observes.

Household consumption remains stable, government consumption rises

Household consumption did not change in the period (0.0%), still impacted by the effects of the pandemic. Government consumption increased by 0.7%. Investments (Gross Fixed Capital Formation) dropped 3.6% in the period.

“Despite the government assistance programs, the increase in credit to individuals and the improvement in the job market, the real wage bill has been falling, negatively affected by the increase in inflation. Interest rates also started to rise. This impacts the consumption of families”, observes Rebeca.

The Brazilian trade balance increased by 9.4% in exports of goods and services, the biggest change since the first quarter of 2010. In terms of exports, the highlight was the soybean harvest stimulated by favorable prices. On the other hand, imports dropped 0.6% compared to the first quarter of the year.

Semester variations

In the first half of the year, GDP grew 6.4% compared to the same period in 2020, with positive performance in agriculture (3.3%), industry (10.0%) and services (4.7%) . “We had a growth, but the basis of comparison must be observed. The economy shrank 5.6% in the same half of last year, when the greatest impact of the pandemic occurred”, adds Rebeca Palis.

In the annual comparison, the GDP advanced 12.4% in the second quarter of this year, with an increase of 1.3% in agriculture, 17.8% in industry and 10.8% in services.

From an expenditure perspective, household consumption grew 10.8%. Investments (Gross Fixed Capital Formation) advanced 32.9% in the second quarter. This increase is explained by the positive results in domestic production, imports of capital goods and construction. Government consumption increased by 4.2%.

In the external sector, exports grew 14.1% and imports advanced 20.2%. In exports, the growth is explained mainly by the increase in agricultural products, in the automotive industry; machinery and equipment and non-metallic minerals. On the other hand, imports grew, mainly due to the increase in purchases of motor vehicles; machines and equipment; steel and oil refining.

(with IBGE News Agency)

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