Brazil’s GDP Declines 4.1% in 2020, Beating Bleak Prospects | Business and economic news
The drop was the worst in decades, but exceeded forecasts by the World Bank and the International Monetary Fund, which estimated that Brazil’s GDP in 2020 would decline by 8% and 9.1%, respectively.
Brazil’s economy shrank 4.1% last year amid the pandemic, data showed Wednesday, the worst drop in decades, but not as much as originally expected due to cash transfers to the poor .
Latin America’s largest economy grew 3.2% in the fourth quarter, according to the official statistics agency IBGE, more than the median estimate of 2.8% from a Reuters poll of economists.
“People expected us to fall by 10%,” said President Jair Bolsonaro, who downplayed the severity of the pandemic and opposed lockdowns.
“Part of what has moved the economy is emergency aid,” he told reporters, adding that his government had done everything possible to keep the economy running.
Yet a second wave of COVID-19 has killed Brazilians in record numbers in recent weeks, darkening the economic outlook and adding to fears of a further slowdown earlier this year.
The decline in 2020 was the worst since the start of the current IBGE series in 1996. The fall in 2020 was also the worst since a 4.35% drop in GDP recorded in 1990, according to data from the central bank dating back to 1962, and the third. the steepest in this series.
Among the bleakest predictions at the start of the pandemic, the World Bank and the International Monetary Fund estimated that Brazil’s GDP for 2020 will decline by 8% and 9.1%, respectively.
The 3.2% expansion in the fourth quarter was led by a 2.7% growth in services, a 3.4% expansion in household consumption and a 20% increase in business fixed investment , said the IBGE.
“We had a big fall [in activity] last year, but with emergency aid it was much lower than initially expected. It could have been much worse… but public finances are now very fragile, ”said Alexandre Almeida, economist at CM Capital in Sao Paulo.
Government cash transfers to millions of poor families last year totaled some 322 billion reais ($ 56.5 billion), a budget increase of about 4.5 percent of GDP.
Mexico, which has not provided such a generous budget support program, saw its economy collapse 8.5% last year.
During the year, however, only Brazilian agriculture showed positive growth, up 2% from 2019. Services and household consumption fell by 4.5% and 5.5% respectively. due to COVID-19 and restrictions to combat its spread.
According to the IBGE, GDP per capita fell 4.8%, the biggest drop since at least 2000.
IBGE figures show that economic activity is still 1.2% below its level at the end of 2019 and 4.4% below its peak in 2014.