GDP Monitor points to 1.0% drop in economic activity in first quarter
FGV’s GDP Monitor points to a 1.0% decline in seasonally adjusted economic activity in the first quarter compared to the fourth quarter of 2019. Between February and March, activity dropped -5.3%. Year-over-year, the economy grew 0.3% in the first quarter and shrank 0.9% in March.
“The 1.0% economic retraction in the first quarter of the year exposes the huge challenges that will be faced in the economic sphere over the course of 2020. The social distancing measures were only in place for around one-sixth of this quarter (the last 15 days of March) but they were enough to cause this significant economic decline. The 5.3% drop between February and March is the biggest decrease since the GDP Monitor began in 2000, and it seems likely that this record decline will grow even bigger in the next few months. Inevitably, 2020 will be marked by a sharp economic slowdown due to the COVID-19 pandemic. We have gone from a slow pace of growth in the last three years to a fast retraction, which is only just beginning,” said Claudio Considera, the coordinator of FGV’s GDP Monitor.
Graphs 1 and 2 in the accompanying press release show that the 1.0% decrease in economic activity in the first quarter of this year marked the end of a period of growth between the first quarter of 2017 and the fourth quarter of 2019, when average annual quarterly growth was
0.4%. This change in economic trajectory is mainly explained by the performance of the economy in March of this year, when activity dropped 5.3% – the biggest decrease since records began in 2000. It is also worth noting that the results in January (+0.6%) and February (+0.2%) were already very disappointing. Year-over-year, these results also presented a sharp economic slowdown, although the quarterly rate remained positive, at 0.3%. There was growth in all three major categories (agriculture, industry and services), although only agriculture experienced an increase in the pace of growth. In seasonally adjusted terms, agriculture was the only one of these three categories to grow.
The complete study is available here.