'Preview' of GDP indicates 9.73% drop in The Brazilian economy in April

The level of activity of the Brazilian economy recorded a decrease of 9.73% in April, compared to the previous month, points to the Economic Activity Index (IBC-Br), released on Thursday (18) by the Central Bank (BC).
The indicator is considered a "preview" of gross domestic product (GDP), which is the sum of all goods and services produced in the country and serves to measure the evolution of the economy.
The result reflects the effects of the pandemic of the new coronavirus, felt with greater intensity in the economy from March. The number was calculated after seasonal adjustment, a kind of "compensation" to compare different periods.
According to bc information, this was the biggest drop in the indicator since the beginning of its historical series in January 2003, that is, in just over 17 years.
In March, covid-19's first month of impact on the economy, the IBC-Br had already recorded a 6.16% decrease compared to February. Before that, the biggest fall had occurred in May 2018 (-3.96%), reflecting the impacts of the truckers' strike.
Compared to April last year, the Central Bank said, the institution's economic activity index fell by 15.09%. In this case, the index was calculated without seasonal adjustment, as it considers equal periods.
In the first four months of this year, according to the institution, the economic activity index recorded a reduction of 4.15%. In the 12 months to April 2020, BC figures indicate a 0.52% drop in previous GDP – without seasonal adjustment.
On May 13, the Brazilian government estimated a 4.7% drop to 2020 GDP, based on the prospect that social distancing measures would end at the end of May.
The World Bank forecasts a drop of 8% in Brazilian GDP and the International Monetary Fund (IMF) estimates a drop of 5.3% in 2020.
Financial market economists last week estimated a drop of 6.51% for Brazilian GDP in 2020.
In 2019, according to data from the Brazilian Institute of Geography and Statistics (IBGE), GDP grew by 1.1%. It was the weakest performance in three years. In the first three months of 2020, a 1.5% decrease in the Brazilian economy was recorded.
On Wednesday (17), the Minister of Economy, Paulo Guedes, said that the Brazilian economy is in recession and that the scenario "can turn into depression", if appropriate measures such as the implementation of structural reforms are not adopted.
"We partially crippl our economy, and we cause, in self-inflicted, a recession. That can turn into depression if we don't fight properly," the economy minister said at the time.
The technical recession is characterized by a period of fall in Gross Domestic Product (GDP) for two consecutive quarters, with increased unemployment and falling income.
The depression, on the other hand, is a more severe state of the recession, that is, a long period of unemployment, bankruptcies of companies and reduced levels of production and investment.
The results of the IBC-Br are considered a "preview of GDP". However, they did not always show proximity to the official gross domestic product data.
The calculation of the two is slightly different – the BC indicator incorporates estimates for agriculture, industry and the service sector, in addition to taxes.
The IBC-Br is one of the tools used by bc to define the country's basic interest rate. With the lower growth of the economy, for example, theoretically there would be less inflationary pressure.
Currently, the Selic rate is at 2.25% per year, at the historical low, and the Central Bank indicated in the statement of the last meeting of the Monetary Policy Committee (Copom) that a "possible future adjustment in the current degree of monetary stimulus will be residual".