GDP Monitor points to 9.3% slump in economic activity in April 2020

The economy experienced an all-time decline in April, both in comparison with the previous month and year-over-year, due to the social isolation measures needed to fight the COVID-19 pandemic. Records were also broken in manufacturing and services
Economics
23 June 2020
GDP Monitor points to 9.3% slump in economic activity in April 2020

FGV’s GDP Monitor points to a 9.3% seasonally adjusted drop in economic activity in April 2020, compared to March. In the three months to April, the decline in activity was 6.1%, compared to the three months ending in January. In annualized terms, the economy slumped 13.5% in April and 4.9% in the quarter to April.

“The April figures show that this decline in the economy was the worst in recent history, affecting not just GDP as a whole but multiple activities and demand components. Manufacturing and services, which together account for approximately 95% of total value added in the economy, also saw their biggest ever reductions since present records began in 2000, and the same applies to household consumption and gross fixed capital formation. Brazil had previously experienced three years of feeble growth and not yet recovered from its previous recession, which ended in 2016, reducing GDP by 8.1% over the course of 11 quarters. Therefore, this 9.3% slump in GDP in just one month, which we recorded in April, is daunting and it makes clear the huge challenges that the economy will face in the rest of 2020,” says Claudio Considera, the coordinator of FGV’s GDP Monitor.

The economy experienced an all-time decline in April, both in comparison with the previous month and year-over-year, due to the social isolation measures needed to fight the COVID-19 pandemic. Records were also broken in manufacturing and services. In seasonally adjusted terms, manufacturing declined 15.7%, influenced by significant drops in processing (24.3%) and construction (11.7%), while the 7.3% decline in services mainly reflected deteriorations in retail (18.3%), transport (15.1%) and other services (14.0%). Regarding demand, gross fixed capital formation and household consumption also experienced record declines, of 23.0% and 7.7%, respectively.

Breaking down these two components, we can see that at the margin, there were decreases in the gross fixed capital formation components for machines and equipment and construction, as well as for the services and goods (non-durable, semi-durable and durable) components of household consumption.

The complete study is available here.