Pandemic leads to 6.7% downturn in economic activity in Brazil – FIRJAN

RIO DE JANEIRO, BRAZIL – A study released by the Federation of Industries of the State of Rio de Janeiro (FIRJAN) shows that Brazil’s economic activity shrank by 6.7% in the 12-month period that began in March 2020, with the emergence of the novel coronavirus pandemic, until February 2021.

The regional impact of the pandemic on the 3 major economic sectors reveals which Brazilian states have suffered most severely from the impacts of Covid-19.

To this end, FIRJAN’s economists used data provided by the Brazilian Institute of Geography and Statistics (IBGE) for the 3 major economic sectors (industry, trade and services).

The manager of Economic Studies at FIRJAN, Jonathas Goulart, said yesterday, May 6th, that only 14 states hold monthly data for the IBGE surveys. Together, these states represent 87.8% of the Gross Domestic Product (GDP, sum of all goods and services produced in the country).

Services

In the services sector, the states of Bahia and Ceará, which account for the largest share of the sector in the GDP, posted the worst rates, of -16.2% and -15.3%, respectively. “The states with stronger service activity within their production, their GDP, ended up having more goods impacted and suffering more the setbacks of the novel coronavirus pandemic, while the states with stronger industry suffered less,” he said.

In Rio de Janeiro, where the sector accounts for almost 70% of GDP, the drop reached 8.6%. “These are states with very strong tourism activities,” highlighted the economist. Nationwide, the retraction in services reached 8.3%.

In addition to Bahia, Ceará and Rio de Janeiro, the results of Rio Grande do Sul (-13%), Pernambuco (-14.6%), Espírito Santo (-7%), São Paulo (-8.1%), Paraná (-10.6%), Goiás (-7.2%), Minas Gerais (-5.2%), Mato Grosso (-2.2%), Santa Catarina (-2.9%) and Pará (-0.7%) were also assessed. In the sectoral analysis, the services sector recorded a positive rate only in Amazonas (+0.6%), explained by the performance of the logistics segment, which experienced a large increase in demand due to the growth in online sales.

Trade and industry

In trade, half of the states analyzed posted a negative rate. They are Bahia (-8.5%), Rio Grande do Sul (-6.7%), Ceará (-5.7%), São Paulo (-4.4%), Rio de Janeiro (-4.2%), Goiás (-3.1%), and Paraná (-1.2%).

In Brazil, trade activity fell 1.9% between March 2020 and February this year. Pará posted the best performance in trade (+8.1%), explained, mainly by e-commerce sales. The sector also evolved positively in Pernambuco and Mato Grosso (+0.1% each), Santa Catarina (+1.9%), Amazonas (+2.4%), Minas Gerais (+2.8%), and Espírito Santo (+3.6%).

According to the economist, the industry in Rio de Janeiro, particularly the extractive industry, managed to maintain its production trajectory, “even in a pandemic year.” This prevented a larger drop in the state’s industrial activity. Industrial activity fell 2.1% in the state, in the 12 months analyzed, half the drop registered for the sector in Brazil (-4.2%).

The industry posted a positive rate only in Pernambuco (+3%) and in Pará (+0.1%). In this state, the highlight is the extractive industry, driven by exports of iron ore, Goulart said.

The largest declines in the industrial sector were observed in Espírito Santo (-13.9%) and Bahia (-9.3%). In Bahia, according to Goulart, the state suffered greatly from the drop in vehicle production (-55.5% in the accumulated rate in twelve months until February 2021), compounded by the closing of the Ford plant in Camaçari.