GDP recovers and rises 7.7% in the third quarter of 2020, but is below the expectations of economists

SÃO PAULO – After a fall in the second quarter at the height of restriction measures due to the coronavirus pandemic, the Gross Domestic Product (GDP) for the third quarter of 2020 showed a resumption, as revealed by the Brazilian Institute of Geography and Statistics (IBGE). ) this Thursday (3). The Brazilian economy registered an increase of 7.7% in the period from July to September compared to the second quarter. Despite the increase, the result was below the expectations of economists.

With the result, the country’s economy is at the same level as 2017, with an accumulated loss of 5% from January to September compared to the same period in 2019.

Industry grew 14.8% and services recovered 6.3%, while agriculture and livestock fell slightly 0.5%. Compared to the same period in 2019, GDP decreased 3.9% and, in current values, reached R $ 1,891 billion, of which R $ 1,627 billion in Value Added at Basic Prices and R $ 264.1 billion in Taxes. on products net of subsidies.

According to the median of economists’ projections compiled by Refinitiv, the expectation was a 9% increase in the July-September period compared to April-June, compared to a 9.7% drop in the second quarter compared with the first. According to the projection compiled by Bloomberg, the expectation was that the Brazilian GDP would expand 8.7% in the quarterly comparison. The projected fall in the annual comparison was 3.5%, according to the consensus of Refinitiv and Bloomberg, but the effective fall was 3.9%.

“We grew on a very low base, when we were at the height of the pandemic, the second quarter. There was a recovery in the third, compared to the second quarter, but if we look at the interannual rate, the fall is 3.9% and in the accumulated result of the year we continue to fall, both in Industry and Services. Agropecuária is the only one that grows in the year, strongly driven by soybeans, which is our largest crop, ”highlights Rebeca Palis, coordinator of National Accounts at IBGE.

In the quarter, the GDP expansion was mainly due to the performance of the Industry, with an emphasis on the 23.7% growth in the Transformation sector. There were also increases in the activities of Electricity and gas, water, sewerage, waste management (8.5%), Construction (5.6%) and Extractive Industries (2.5%).

“Looking at the production outlook, the highlight was the Transformation Industry, even because it fell a lot in the second quarter (-19.1%), with operating restrictions. Industry grew as a whole by 14.8% and Transformation by 23.7%, but we are back at the level of the first quarter ”, analyzes Rebeca.

Another highlight was the Services sector, which has the greatest weight in the economy, and grew in all segments: Commerce (15.9%), Transport, storage and mail (12.5%), Other service activities (7, 8%), Information and communications (3.1%), Administration, defense, public health and education and social security (2.5%), Financial, insurance and related services activities (1.5%) and Real estate activities ( 1.1%).

“Services fell 9.4% in the second quarter and are now up 6.3% in the third quarter. But it did not recover to the level of the first quarter, because there was a fall in both supply and demand. Despite operational restrictions being removed, people are still afraid to consume, especially services provided to families, such as accommodation, food, cinemas, gyms and beauty salons. Performance improved in relation to the second quarter, but it has not yet returned to pre-pandemic levels, ”emphasizes Rebeca.

Regarding the negative variation of 0.5% in Agriculture, Rebeca says that it is an adjustment of crops. “The most outstanding thing is the growth of 2.4% in the year, compared to a fall of 5.1% in Industry and 5.3% in Services”, has pointed out the IBGE coordinator.

From the perspective of spending, what weighs the most is household consumption (65%), which expanded by 7.6%, at a level very similar to that of GDP, highlights Rebeca. He points out that the indicator had fallen by 11.3% in the second quarter, but in the third, the consumption of goods increased sharply, especially durable goods and food in the agri-food chain. “Consumption of services grew, but it was much less than the previous fall, since families did not return to consumption at the level before the pandemic,” he says.

Investments (Gross Formation of Fixed Capital) grew 11%. But according to Rebeca this performance is related to the base of comparison with the second quarter in which it had fallen by 16.5%. “In the year, the fall is 5.5%. And the country still has investment in imported equipment and since the dollar is high, it has a downward influence ”, says Rebeca.

Regarding the external sector, Exports of Goods and Services fell 2.1%, while Imports of Goods and Services fell 9.6% in relation to the second quarter of 2020. According to the expert, one of them is the exchange.

“Imports fall due to low economic activity and the devalued exchange rate. On the other hand, exports have not grown due to the problems of trading partners. In addition to the falls in the import and export of services such as international travel, which plummeted as well as passenger air transport, ”says Rebeca.

Agriculture rises in the annual comparison

In the annual comparison between sectors, only agriculture registered an increase of 0.4%, driven by growth in production and productivity gains from agricultural activity. The highlights are crops with relevant harvests in the third quarter that showed growth in the estimate of annual production; coffee (21.6%), sugar cane (3.6%), cotton (2.5%) and corn (0.3%). On the other hand, orange and bean crops, whose harvests are also significant in this quarter, fell 3.4% and 4.0%, respectively.

The industry registered a 0.9% drop. Construction showed a drop in the volume of value added (-7.9%), corroborated by the decrease in occupancy in this activity. The Manufacturing Industries presented a negative variation of 0.2%, mainly influenced by the decreases in the Manufacture of clothing, in the Manufacture of vehicles and other transport material, in metallurgy and in machinery and equipment.

The services sector, which represented 73% of GDP, fell 4.8% compared to the same period of the previous year, highlighting the fall in Other service activities (-14.4%) and Transport, storage and mail (- 10.4%). Public administration, defense, health and education and social security (-5.4%), Commerce (-1.3%), Information and communications (-1.3%) also fell. Growth: Financial activities, insurance and related services (6.0%) and Real estate activities (2.7%).

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