This fall of Gross Domestic Product (GDP), 0.1% in the second quarter compared to the level of the first quarter of this year, it’s just not entirely disappointing because it was expected. But, as small as this disappointment may be, it is an additional stumbling block for this year’s expected growth.
Also illusory is the 1.8% performance in 12 months. This is a comparison with a very weak base, which was the overthrow that took place in 2020, the first year of the pandemic. In any case, you can count on an increase in GDP this year of around 5%. how the rapper sings emicide at community dances and on social media: “Last year I died, but this year I don’t die”.
The National Accounts for the second quarter send other messages. The first one is the fragility of household consumption, which had zero advance. Even with emergency aid, despite the reduced value, and some return to work, the consumer cannot leverage economic growth: there is a lot of debt close to maturity is inflation that eats away at your purchasing power.
From the perspective of the offer of goods and services, the disappointment was for the agriculture and livestock sector: fall of 2.8%. The relative accommodation of prices of commodities which, in turn, also dropped something as a result of the appreciation of the real (decrease of the dollar in the internal exchange), the frosts in some locations It’s from beginning of the dry period.
On the other hand, despite the disorganization of the flow of supplies, the thud in the industry was lower than expected, at just 0.2%. And the sector of services, benefited from the return to economic activity with the weakening of the pandemic, it advanced 0.7% – something more than expected.
This leaner GDP will have a negative impact on the rest of the year. THE delta variant it is no longer a critical factor capable of further compromising recovery. But there are others.
The most important of them is the water crisis. Until now, the government Bolsonaro preferred to hide the seriousness of the problem. But it is still not being emphatic enough to prepare the population for likely collapses in the supply of electricity, not just this year, but next year as well.
For now, the government it is limited to pushing for tariffs and certain relocations in energy dispatch. Lack an emergency plan and, more than that, it lacks a aggressive renewable energy investment program to try to make up for the deficiencies in the generation of hydroelectric plants. It is true that any investments in the modalities wind and solar take more than a year to start producing. However, there are reasons to understand that this is not a passing crisis. It tends to get worse. And the mobilization of the consumer to start generating photovoltaic solar energy is the appropriate way to make the population aware of the problem.
In immediate terms, the worsening of the water crisis should especially affect the agribusiness, the most dynamic sector of Brazilian production.
There are three other critical factors that could bring down production in the coming months. The first is inflation that threatens to reach double digits in 12 months, as it is now being aggravated by the “water scarcity rate” that will increase the energy bill by almost 7%. The other is the greater disorganization of public accounts and the public debt (fiscal issue), which scares away investments (see also the other chart). And the third risk factor is the disorder and administrative standstill that can accompany a chaotic electoral process.
That Emicida doesn’t have to update the lyrics of his song with the phrase: “Next year I’m going to die again”.
*CELSO MING IS AN ECONOMY COMMENTARY