GDP drops 0.1% in Q3 2021 and confirms technical recession

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Trade movement in Rio de Janeiro: GDP / decline of 0.1% in the third quarter, according to the IBGE. Photo: Fernando Frazão / Agência Brasil

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Brazil’s gross domestic product (GDP) fell 0.1% in the third quarter, compared to the previous three months. In the second quarter, wealth creation had already fallen by 0.4%, as revised. The two negative results in sequence configure what economists call a technical recession.

The result was released on Thursday (2) by the Brazilian Institute of Geography and Statistics (IBGE) and fell below the midpoint of market projections, which signaled stability. The result also frustrated the expectations of the Ministry of the Economy, which had risen by 0.4%.

Compared to the third quarter of 2020, GDP increased by 4%. In the cumulative result over four quarters, which shows the generation of wealth over an entire year, the growth was 3.9%.

The third quarter result comes at a time when economic growth projections are declining. According to the Focus report (a set of forecasts from banks, consultants and brokerage houses compiled by the Central Bank), this year’s GDP expectation, which has been low for seven weeks, has reached 4.78%. For 2022, the projections have declined for eight weeks and now point to an expansion of just 0.58%.

In the division by major sectors (supply perspective), the results are as follows:

Services: + 1.1% compared to second quarter 2021 and + 5.8% compared to third quarter 2020 Industry: 0% compared to second quarter 2021 and + 1.3% compared to third quarter 2020 Agriculture: – 8% compared to the second quarter of 2021 and -9% compared to the third quarter of 2020

From a demand perspective, the IBGE revealed the following variations in the third quarter:

Household consumption: + 0.9% compared to the second quarter of 2021 and + 4.2% compared to the third quarter of 2020 Government consumption: + 0.8% compared to the second quarter of 2021 and + 3.5% compared to in the third quarter of 2020 Investments (Gross Fixed Capital Formation): -0.1% compared to the second quarter of 2021 and + 18.8% compared to the third quarter of 2020

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