Agribusiness boosts the fastest growing states in 2023

Agribusiness boosts the fastest growing states in 2023

The interior should drive the growth of the Brazilian economy in 2023, leveraged by the good performance of agribusiness and which should be reflected in other sectors.

The expectation of a superharvest of grains boosts the economies of the Midwest and South of the country, which should grow the most this year, according to projections by Banco do Brasil. Of the five states with the highest projected increase in Gross Domestic Product (GDP) in 2023, four are from these regions.

The latest report by the National Supply Company (Conab) estimates a harvest of almost 310 million tons, around 14% more than in the previous cycle. “With favorable weather conditions, the agricultural harvest should break a record and livestock should have growth above 1% in the year”, project economists Vitor Vidal and Myriã Bast, from Bradesco.

The impacts should be felt mainly in the first quarter. The bank projects a 7% growth in the agricultural GDP.

Other institutions foresee even greater expansion. The median of the projections of economists consulted weekly by the Central Bank points to a rise of 7.55% in the sector’s GDP this year.

It is precisely agribusiness that accounts for the slight improvement, which has occurred in recent weeks, in estimates for the country’s total GDP in 2023 – the median forecast is now a 0.89% increase, according to the most recent Focus bulletin.

For the two other major sectors of the economy, expectations are much more modest. The market consensus points to an increase of only 0.3% in GDP for industry and 0.85% for services.

BB’s projection for the national GDP is more optimistic than the market average. The bank projects an increase of 1.2% this year.

With the exception of the South, which according to BB is expected to repeat the 1.7% increase in GDP estimated for 2022 this year, all other regions tend to suffer a slowdown in economic growth, due to weaker performances by industry and services . In general, it is agribusiness that avoids a stronger brake.

Agribusiness will leverage the economy of the Midwest

The region that should have the greatest growth in Brazil, in 2023, according to BB, is the Midwest. The bank projects expansion of 2% in the regional GDP. One of the drivers is the crop, which, according to the National Supply Company (Conab), should reach 151.1 million tons in the region, 9.4% more than in the past cycle.

“This optimistic scenario for agriculture should reflect positively on the performance of the food industry, which is more relevant in the states of Goiás, Mato Grosso and Mato Grosso do Sul”, point out BB analysts.

The Central Bank points out in its regional bulletin that the estimate of another record grain harvest should maintain the dynamism of the region’s economy and cushion the impacts of the slowdown in other sectors, projecting a performance above the national average.

One of the highlights in the Midwest tends to be the recovery of Mato Grosso do Sul, whose agricultural GDP shrank by 0.4% last year, motivated by climate issues. This year, the expectation is that it will grow 14.7%, according to BB. The grain harvest in the state should increase 17.8%, to 25.9 million tons, according to Conab estimates.

In Mato Grosso, the expectation is that industrial activity – which had strong growth of 21.7% last year, according to BB – will remain stable in 2023. Even so, the state should be one of those that should grow the most this year, with GDP advancing 3.2%, according to the bank. The dynamism comes from other sectors, such as services, which reflects the good performance of agribusiness.

In the South, drought threatens harvest in RS, but PR comes with good numbers

The South, which grew below the national average in 2022, should have an expansion in economic activity greater than the national one in 2023, according to an assessment by BB.

BB’s projection is for an increase of 1.7% in the South, driven by the recovery of agribusiness, both in Paraná (expected increase of 16.2%) and in Rio Grande do Sul (44.4%).

Conab’s expectation is that the people of Rio Grande do Sul will harvest 33.2 million tons, 24.7% more than in the last harvest. Prospects for Paraná are for a harvest of 45.7 million tons, 35.4% above the previous cycle.

“Agriculture tends to be a driving factor, bearing in mind that the region should benefit from the increase in the agricultural harvest, with consequences for other activities”, says a Central Bank report.

But the most optimistic expectations for Rio Grande do Sul are under threat. Conab points out that the distribution of rainfall in the state was irregular and the volumes were less than 150 mm in February. In addition, high temperatures kept soil water levels low, with crops such as soybeans and corn experiencing water restriction.

“The drought in Rio Grande do Sul has been causing losses to farmers”, says Eduardo Três, senior relationship manager at hEDGEpoint Global Markets.

During the summer, a crucial period for soybean development, La Niña harmed the crops. The hot climate and the absence of rain meant that the grains sown around October and November 2022 had difficulties growing and maturing until the harvest time, which extends from January to April. “Even with rain on the radar and already manifesting itself in some regions, it is still difficult to visualize a good scenario”, says Três.

hEDGEpoint revised down expectations for the Rio Grande do Sul soybean harvest from 22 million to 15 million tons. And it lowered the estimate of the corn harvest, from somewhere between 5 and 6 million tons, to only 3 million. According to Conab, in the week ending on the 11th, 59% of the area planted with maize had already been harvested in RS. From soybeans, nothing had been harvested.

Meanwhile, the industrial and service sectors in the South are expected to be hurt by the high level of interest rates. According to the BC, a slowdown is also expected in the process of recovery of the labor market in the region, after a period of significant reduction in the unemployment rate and partial recovery of earnings.

Social benefits should help northeast economy

Another region that should grow above the national economy is the Northeast, whose GDP should increase 1.6%, according to BB.

A number of factors contribute to this more positive scenario, according to the bank. Social benefits should boost the service sector. The agricultural sector should grow more vigorously in Rio Grande do Norte (24%), Piauí (7.8%) and Maranhão (5.0%). In addition, the recovery of industry in Pernambuco and Ceará should boost industrial GDP.

“The maintenance of Bolsa Família at R$600 and the payment of an additional amount of R$150 per child aged up to six years to families in socially vulnerable situations tend to boost the economy in the Northeast, where the participation of these benefits in relation to to the total mass of wages is greater”, mentions BB in a report.

Agribusiness and extractive industry support the economy of the North

The economy in the north of the country should grow 1.5% this year, according to Banco do Brasil. The main drivers of growth in the region will be the strong expansion of agricultural production in Tocantins, which should lead to a 14% growth in rural GDP in the state; the recovery of the extractive industry in Pará; and the advancement of 5G technology, which favors the electronics industry in Amazonas, limiting the effects of high interest rates.

The service sector also benefits from the maintenance of social benefits that were expanded in the second half of 2022.

The Central Bank, in its regional bulletin, points out that the gradual recovery of mineral commodity exports, combined with the positive performance of the manufacturing industry, can also contribute to continued growth in the region in 2023.

Southeast should have more timid growth

The region that concentrates 51.9% of the national GDP is also the one that should have the lowest economic growth this year. BB predicts an increase of only 0.7% for the Southeast.

According to a Central Bank report, there was a loss of pace in all sectors of the Southeast in the second half of 2022, also indicating a cooling off in early 2023.

For São Paulo, the largest state economy, projections point to a rise of 0.5% in GDP.

In Minas Gerais, the expected recovery of dairy farming and an increase in coffee production should lead to a 5.2% expansion in rural GDP. In total, Minas Gerais’ GDP should rise by 1%, estimates BB.

In Rio de Janeiro, GDP should rise 1.2%, with industry benefiting from a more favorable scenario for oil. The impacts were already felt last year, with advances in extraction and transformation, in the coke, oil derivatives and biofuels segments.

The driver of the economy of Espírito Santo must be the services sector, due to the lower degree of income commitment of families in the state. With local industry and agriculture retreating, however, the GDP of Espírito Santo tends to increase by only 0.6%, estimates BB.

BB projections for regional GDP growth in 2023

by region



Midwest 2.0%



North East






By federation unit

























































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