Brazil’s Economy Shrinks Record 9.7 Percent in Second Quarter, Back to 2009 Size

RIO DE JANEIRO, BRAZIL – Brazil’s economy shrank in the second quarter by the most on record, as anti-coronavirus lockdown measures slammed activity in almost every sector, dragging Latin America’s largest economy back to the size it was in 2009.

The pandemic triggered a 9.7 percent fall in gross domestic product from the prior quarter, government statistics agency IBGE said on Tuesday, and an 11.4 percent decline compared with the same period last year.

“These figures represent the height of social isolation when several sectors were partially or totally paralyzed to face the pandemic.” said IBGE coordinator Rebeca Palis.

The median estimates in a Reuters poll of economists were for a 9.4 percent fall on the quarter and an annual decline of 10.7 percent.

IBGE also revised the January-March figures to a 2.5 percent fall in GDP from the initial estimate of a 1.5 percent decline.

The magnitude of the slump in activity across the economy in the second quarter was huge: industry fell 12.3 percent, services 9.7 percent, fixed investment 15.4 percent, household consumption 12.5 percent, and government spending 8.8 percent.

Household consumption, which accounts for two-thirds of all economic activity in Brazil, was a particularly heavy drag, IBGE said. Only agriculture expanded in the quarter, by 0.4 percent, IBGE added.

The government’s current forecast is for a 4.7 percent contraction in GDP this year, which would be the largest annual fall since records began in 1900. The average forecast in a weekly central bank survey of economists is for a 5.3 percent decline.

Source: Reuters

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