Brazil’s economy entered a recession, registering a 0.1% decline in the third quarter of 2021, the second with a negative result, impacted by the decline in agricultural activity, reported the official statistics institute (IBGE).
In the second quarter, GDP was revised to -0.4% (from a 0.1% drop) over the previous three months. During this period, the Brazilian economy slowed down the recovery that began in the third quarter of 2020 after the collapse caused by the coronavirus pandemic.
In relation to the third quarter of 2020, the largest Latin American economy grew 4% between last July and September, according to official data.
Between January and September, GDP expanded 5.7% compared to the same period last year, according to the statistical institute. “In the third quarter, GDP changed -0.1% compared to the previous quarter. Agricultural activity fell 8.0%, industry remained stable (0.0%) and services rose 1.1%,” IBGE said in a statement.
The market estimated a result between 0.3% and -0.6% in the 3Q, according to the economic daily Valor. The advance in services reflects an improvement in the health situation in the country, where more than 60% of the population is fully vaccinated, analysts pointed out. Although the new variant of the omicron coronavirus, with three confirmed cases in Brazil, could condition economic performance going forward.
The economy was affected by weak agricultural activity due to the end of the soybean harvest, which is concentrated in the first semester; and the falls in coffee crops (-22.4%), cotton (-17.5%) and corn (-16.0%), among others, with respect to the same period of 2020.
“The fall is attributable to the drought, the water crisis, because there were crop losses and grain production dropped a lot,” said Alex Agostini, from the Austin Rating consultancy.
For Fábio Astrauskas, economist and managing partner of the Siegen consulting firm, the data for the third quarter “had no surprises and reinforces the slowdown trend in the economy since mid-June.”
“The factors that hold back the resumption of growth remain on the scene, such as high inflation and the rise in interest rates together with the high level of unemployment,” he said.
Inflation accumulated 10.67% in twelve months to October and 8.24% so far this year. And unemployment remained high, at 12.6% in the July-September period. The economic result of the third quarter was impacted by the rise in the dollar and the uncertain fiscal outlook linked to the Proposed Constitutional Amendment. The market consensus expectation is for a 4.78% expansion this year.
Reference-www.eleconomista.com.mx