The Brazilian economy, the largest in Latin America, came out of recession by registering an advance of 0.5% in the last quarter of 2021, and grew 4.6% annually compared to 2020, the official statistics institute (IBGE) reported this Friday.
“That advance recovered the losses of 2020, when the economy contracted 3.9% due to the pandemic” of coronavirus, the institute reported.
Annual growth was driven by progress in the services (4.7%) and industry (4.5%) sectors, while agriculture contracted 0.2%, the IBGE specified.
The Gross Domestic Product (GDP) of Brazil added 8.7 billion reais (1.61 billion dollars, at the average exchange rate of 2021).
Despite the positive data, analysts describe the current scenario as a combination of stagnation with inflation, associated with high levels of unemployment, just as the country begins a year of internal uncertainties, due to the presidential election, and external ones, derived from the conflict in Ukraine.
The data for the fourth quarter “shows the positive effects of the advance in vaccination, which made it possible to resume activities, mainly from the second semester,” economist Gilberto Braga, a professor at the IBMEC business university institute in Rio, told AFP. of Janiero.
With the advance of 0.5% in the fourth quarter of the year (compared to the previous period), Brazil officially leaves the technical recession in which it had entered after registering two consecutive periods with a negative result: -0.3% in the second quarter of 2021 and – 0.1% in the third.
In 2021, consumer prices rose more than 10%, the highest annual inflation in six years.
“There was an increase in prices for the working population due to the rise in food, mainly, and due to the high prices of fuel, in line with international market prices,” Braga explained.
To try to stop the incessant advance in prices, the Central Bank of Brazil has gradually raised, since March 2021, the reference interest rate to 10.75% today, despite the impact that this has on the country’s growth, of 213 millions of inhabitants.
Unemployment, although it has shown signs of recovery after the worst moment of the pandemic, stood at 11.1% in the last quarter, affecting 12 million people.
2022 uncertain
For 2022, an election year in Brazil, the market projects an advance of just 0.3% of GDP, according to the latest weekly Focus survey by the Central Bank.
The consulting firm Capital Economics indicated for its part that it expects “growth of 0.8% in 2022”, projecting Brazil “with the worst performance in the region for this year.”
“The uncertainties regarding the country’s political future bring unpredictability and will delay strategic decisions in the economic area,” Braga said.
Elections will take place in October, most likely between President Jair Bolsonaro and former president Luiz Inácio Lula da Silva.
In addition, the impact of the conflict in Ukraine and the sanctions against Russia on the world economy is still uncertain.
“Agribusiness has been one of the most important areas for the growth of the Brazilian GDP” and “basic products such as oil will be more expensive and raw materials such as wheat and corn will be affected due to the impact (of the war) on the import of fertilizers” from that region, something Brazil depends on, added Braga.
For the economist Silvia Matos, coordinator of the Getulio Vargas Foundation’s Macro economic projections bulletin (FGV IBRE), Brazil is experiencing a “challenging” moment and will grow around 0.6% this year.
Added to the internal context of uncertainty, the international situation “will bring more inflation” and “will reduce (even more) the purchasing power of families, which restricts our growth,” Matos points out.
In 2020, Brazil’s economy shrank less than other economies in the region, thanks to government subsidies paid by the Bolsonaro government to millions of Brazilians to deal with the pandemic.
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