Already under the effect of coronavirus and isolation, GDP falls 1.5% in the 1st quarter

Brazil's Gross Domestic Product (GDP) fell 1.5% in the first quarter of 2020 compared to the previous quarter, already affected by the pandemic of the new coronavirus and social distancing, ibge reported on Friday, 29. The weak performance of the indicators in March, when the disease worsened in the country, was enough to compromise the results of the first quarter as a whole. The expectation, however, is that most of the effects will appear in the second quarter, currently underway. The drop halts a four-quarter streak of growth and marks the lowest result since the second quarter of 2015 (-2.1%). As a com, GDP is at a level similar to that in the second quarter of 2012. "The same thing that occurred in other countries affected by the pandemic happened in Brazil, which was the decline in services directed to families due to the closure of the establishments. Durable goods, vehicles, clothing, beauty salons, gym, accommodation, food suffered greatly from social isolation", explains the coordinator of National Accounts of IBGE, Rebeca Palis, in a statement. Household consumption, which accounts for 65% of GDP, had the largest drop (-2%) since the blackout crisis in 2001, while government consumption has remained virtually stable. Investments grew 3.1%, driven by the net import of machinery and equipment by the oil and gas sector. On the other hand, the Brazilian trade balance had a 0.9% drop in exports, with a 2.8% increase in imports. The result came in line with what was expected by the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre-FGV), but worse than the projection of institutions such as Bradesco (-1%) and Itaú BBA (-0.5%). The negative highlight among services, the most relevant sector in the Brazilian economy and most affected by isolation, was in transportation, storage and mail (-2.4%) information and communication (-1.9%). But there was also a drop in trade (-0.8%), administration, health and public education (-0.5%), financial intermediation and insurance (-0.1%). The only increase came from real estate activities (0.4%). In the industry, the drop was driven by the extractive sector (-3.2%). Construction rates also had negative rates (-2.4%), manufacturing industries (-1.4%) and the activity of electricity and gas, water, sewage, waste management activities (-0.1%). Agriculture grew 0.6% compared to the previous quarter. In the annual comparison, the sector grew by 1.9%. The evolution, according to IBGE, can be explained mainly by the performance of some crop products with relevant crop in the first quarter, such as soybean, and by productivity, visible in the estimate of variation in the amount produced before the planted area.