GDP Monitor points to 0.1% contraction in the economy in the first quarter
In its seasonally adjusted series, the GDP Monitor shows a contraction of GDP in the first quarter of the year, compared to the last quarter of last year (-0.1%) and in the comparison between March and February (-0.4%), a decrease that had already been observed in February in relation to January (-0.5%). In the year-on-year comparison, the economic activity grew by 0.5% in the quarter, but fell by 1.7% in the month.
“The result of the FGV-GDP Monitor shows a return of the economy to the negative territory after eight quarters of growth. This scenario is disheartening when observing that the previous eight quarters were not enough to stimulate a significant resumption of the economy after the 2014-2016 recession. These figures reflect the political and economic uncertainty, which has a direct effect on investments and impact the evolution of the economic activity, particular the industrial sector, which jeopardizes the resumption of employment, affecting household consumption. For the first time since November 2017, the 12-month cumulative rate has reported a variation of less than 1.0% in the cumulative data for first quarter,” said Claudio Considera, coordinator of the FGV-GDP Monitor.
The contraction observed in March occurred in a widespread way among GDP components. In the comparison of the series with seasonal adjustment, the 0.4% decrease was a reflection of the reduction of ten economic activities; the only exceptions being the activities of financial intermediation (0.4%) and public administration (0.3%). From the standpoint of the demand, growth was reported only in government consumption (0.7%) and imports (8.3%). In relation to the same month of the previous year, the 1.7% contraction was caused by decreases in the three major economic activities, mainly explained by the performance of the industry, which fell by 5.0% in March. From the standpoint of demand, only government consumption reported a positive variation in this month. It should be noted that, in addition to the worsening economic variables, the difference in the Carnival date this year, compared to 2018, generated a higher “base effect” last year.
The full study is available on the website.