Brazilian economy grows 1.9% in the first quarter of this year, points out IBGE

The Gross Domestic Product (GDP), that is, the sum of all goods and services produced in the country, grew 1.9% in the first quarter of this year, compared to the last three months of last year. The GDP, in the period, totaled R$ 2.6 trillion. The data was disclosed this Thursday (1st) by the Brazilian Institute of Geography and Statistics (IBGE).

Compared to the first quarter of last year, the Brazilian economy grew by 4%. The GDP accumulates an increase of 3.3% in the period of 12 months.

As a result, the Brazilian economy is at the highest level in the historical series, which started in 1996, and 6.4% above the pre-pandemic level (last quarter of 2019).

Sectors

The growth in comparison with the previous quarter was driven by agriculture, which had an increase of 21.6%. According to the IBGE, the result is explained mainly by the increase in soybean production, the main grain crop in the country, which concentrates 70% of the crop in the first quarter and should close this year with a record.

“Soy is very important, especially in the first half of the year, when we have the harvest. And soy is expected to grow by almost 25% and with productivity gains”,

explains IBGE researcher Rebeca Palis.

“Soybean was largely responsible for the growth of the economy as a whole”.

Services, the main sector of the Brazilian economy, also grew in the period (0.6%), with emphasis on the performance of transport activities and financial activities (both with a rise of 1.2%).

Industry, in turn, had a negative change of 0.1% in the period, which, according to the IBGE, represents stability. Capital goods (machinery and equipment used in the productive sector) and intermediate goods (industrialized inputs used in the productive sector) registered a decrease, while mining and quarrying grew by 2.3% and electricity and water, gas, sewage, waste rose 1.7%.

Construction and the manufacturing industry fell in the period, by 0.8% and 0.6%, respectively. According to Rebeca Palis, these sectors were impacted by the basic interest rate at a higher level than at the beginning of last year.

“The construction and transformation industry depend a lot on credit. They are affected by the increase in interest rates and by the restrictive monetary policy, with the increase in the cost of credit”,

says the researcher.

From the perspective of demand, growth was sustained mainly by the external sector. Exports of goods and services fell by 0.4%, but imports dropped even more (-7.1%).

Family consumption (0.2%) and government consumption (0.3%) also increased. Gross fixed capital formation, that is, investments, dropped 3.4% in the period, influenced by the monetary policy that makes credit more expensive.

Household consumption benefited from factors such as the improvement in the labor market, the increase in workers’ wages and the reduction in inflation in recent months. But its growth was restricted by household indebtedness and also by rising credit.

annual comparison

Compared to the first quarter of 2022, agriculture also boosted GDP growth, with an increase of 18.8%. The other sectors also grew: services (2.9%) and industry (1.9%).

From the perspective of demand, the external sector also contributed well, with a 7% increase in exports. In this comparison, household consumption increased by 3.5%. Government consumption (1.2%) and investments (0.8%) also presented positive results.

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