Brazil’s economic activity grew 1.7% in Q1 – FGV

RIO DE JANEIRO, BRAZIL – Economic activity grew 1.7% in the first quarter 2021, in the seasonally adjusted series, compared to the fourth quarter 2020. Compared to the first quarter last year, growth stood at 1.6%. Considering March, there was a 2.1% drop compared to February and 5.2% growth compared to March 2020.

The data are from the Gross Domestic Product (GDP) Monitor, released May 17 by the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre/FGV). According to the GDP-FGV Monitor coordinator, Claudio Considera, the positive performance in comparison with last quarter was surprising, albeit pointing to fragility in growth in the monthly comparison, due to the Covid-19 pandemic.

“This growth was observed in all three major activity sectors as well as in the components of demand. However, in the monthly comparison, the poor performance in March, compared to February, points to fragility in growth, given the tightening of social isolation measures in several Brazilian cities. The need to introduce new isolation measures was due to the worsening of the pandemic in Brazil, with the increase in the number of infections and deaths from late February.”

According to the economist, the results evidence the need to accelerate vaccination against Covid-19 as a first step “so that the economy may grow in a more sustainable way in the long term.”

The Ibre/FGV reports that an additional seasonal adjustment was required in the analysis released yesterday, due to the impact of the pandemic in 2020 and 2021. Otherwise, the result for the quarter would stand at 1% if the same seasonal factors applied until 2019 were used. With the same factors, the variation for March would be positive by 2.6%.

In values, the estimate for the GDP in the first quarter 2021 stood at R$2.113 trillion (US$400 million).

Indicators

Household service consumption continues to be the main factor responsible for the overall negative performance of consumption, with a drop of 2.8%, as Ibre/FGV data show that household consumption decreased 1.2% in the first quarter when compared to the same period last year. By sectors, there was an 8.2% increase only in the consumption of durable goods, which contributed 0.8% to the indicator.

The gross formation of fixed capital grew 10.4% in the first quarter, year-on-year. All the indicator’s components showed an increase, with machinery and equipment standing out due to the import of oil exploration platforms.

In the same period, imports rose 6.5%, influenced by the high growth of intermediate goods and mineral extraction products. Service imports continue to drop, although less than in the second half of last year.

Exports grew 0.5% in the first quarter this year, compared to the same period last year. The main contributions to the slight increase came from the capital goods and consumer goods sectors, driven by growth in the consumption of non-durable and durable goods. Agricultural products, intermediate goods, and services posted a drop in exports in the analyzed period.

The investment rate in the first quarter 2021 stood at 17.1%, in current values. Consequently, the average of the quarterly investment rates since the first quarter 2000 stood at 17.9% and the average of the quarterly investment rates since the first quarter 2015 stood at 15.8%.

The institute reported that information regarding the changes in the accounting of oil exploration platforms in the gross formation of fixed capital have not been updated in this release.

Source: Agência Brasil

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