FGV’s GDP Monitor points to an 8.7% drop in economic activity in the second quarter, compared to the first quarter, in seasonally adjusted terms. In monthly terms, GDP grew 4.2% in June, compared to May. Year-over-year, the economy shrank 10.5% in the second quarter and 6.5% in June.

“The economy’s result in the second quarter was the worst experienced by Brazil since 1980. The COVID-19 pandemic has undeniably posed huge challenges for the Brazilian economy, which will take a long time to tackle. However, looking at the second quarter’s different months, we can see that the worst performance was in April. Although the annualized rates in May and June were highly negative, they were less bad in seasonally adjusted terms. These results show that although the economy was in a worse situation in the second quarter than in the first, an improvement in activity has been observed recently,” says Claudio Considera, the coordinator of FGV’s GDP Monitor.

The 8.7% contraction in economic activity in the second quarter is the largest drop recorded in Brazil since 1980. This rapid deterioration in GDP was influenced by strong declines in industry (-12.8%), services (-8.4%) and practically all demand components, except exports, which grew 1.3% in the second quarter. We can see that the Brazilian economy has been directly affected by the COVID-19 pandemic since March and the biggest monthly decline was in April. In May and June, the economy grew again, although the annualized rates still show major drops. The economy is still in a much worse situation than last year, but the year-over-year decline in June (-6.5%) is practically half the figures recorded in April and May (-12.3% and -12.6%, respectively).

The complete study is available here.