RIO DE JANEIRO, BRAZIL – On Thursday, June 4th, the Federation of Industries of the State of Rio de Janeiro (FIRJAN) released its projections, showing a 6.4 percent drop in the State’s Gross Domestic Product (GDP) in 2020.
Should these projections be confirmed, this will be the worst result of a historical series that considers data released by the Brazilian Institute of Geography and Statistics (IBGE) since 2002, when the methodology was last changed.
The federation’s estimates show that in the first quarter of the year there was a 0.6 percent drop compared to the same period in 2019. When compared to the fourth quarter last year, the decline was 1.9 percent.
According to the study “Rio de Janeiro: results and perspectives for the GDP”, the sharp downturn in 2020 is the result of the impacts of the Coronavirus pandemic and the current economic, political and social scenario.The projections for the service sector are for a drop of 6.7 percent, and 6.3 percent for industry. The extractive industry is expected to retreat by 7.3 percent, since the current crisis is affecting the global market and, as a direct effect, the downturn in the world economy is impacting the demand for oil and gas.
In terms of building construction, a 6.2 percent decline is projected, while for the manufacturing industry, the projection is for a 5.9 percent decline. In this case, FIRJAN primarily considers the potential negative impacts of the Argentine crisis on exports, particularly on the automotive sector, and the lower external demand for the metallurgy sector.
According to FIRJAN, the economy of Rio de Janeiro is expected to rebound slowly, and all projections consider the end of restrictive measures to tackle the coronavirus in the second week of June.
Should the deadline for restarting activities be extended, the prospect of an even steeper drop for this year is not ruled out.