Rio de Janeiro – The Brazilian Gross Domestic Product (GDP), i.e. the sum of all goods and services produced in the country, was up 2.3% in 2013. The GDP stood at R$ 4.84 trillion, as per figures released this Thursday (27th) by the Brazilian Institute of Geography and Statistics (IBGE, in the Portuguese acronym). In 2012, the GDP was up 1%.
In quarter four, 2013, the GDP was up 0.7% from the preceding quarter, and 1.9% from Q4 2012. The result exceeded forecasts by financial analysts. In Q3, the GDP was down 0.5% from Q2.
On the production end, the three sectors of the economy grew in 2013, highlighting agriculture (7%). Services grew by 2% and industry was up 1.3%. On the side of demand, the highest increase was seen in gross fixed capital formation (investment), up 6.3%. Family consumption was up 2.3% and government consumption was up 1.9%.
The rate of growth of Brazilian agriculture was the highest since 1996, when the GDP calculation methodology currently employed was adopted. “The highlight was soy, which saw increased output stemming from productivity gains,” said IBGE national accounts researcher Rebeca Palis.
According to the institute, soy output was up 24.3% in 2013, while planted area increased by only 11.3%. Other agricultural products which saw an increase in output in 2013 were sugarcane (10%), maize (13%) and wheat (30.4%).
Services sector highlights include information services activities (up 5.3%), transportation, storage and mail (2.9%), and trade (2.5%). Services account for nearly 70% of the productive sector in Brazil.
Industry had the lowest rate of increase across the productive sector. The highlights were production and distribution of power, gas and water (2.9%), the processing industry (1.9%) and civil construction (1.9%). The mineral extraction industry was the sole industrial activity to see a decline in 2013, by 2.8%.
Investment
As pertains to demand, the highlight was investment. The main reason for the increase was a higher demand for machinery and equipment, which was up 10.2%. The investment-to-GDP ratio went from 18.2% in 2012 to 18.4% in 2013.
“Investment is what made the difference, since it had dropped by 4% in 2012. The government created several lines of financing (including those offered by the Brazilian Development Bank – BNDES). Housing programs, like Minha Casa, Minha Vida, have also played a part,” said Palis.
Family consumption increased for the tenth straight year, driven by a 2% increase in actual total wages paid and an 8.5% increase in credit operations involving natural persons.
Nonetheless, the rate of growth of consumption remains bearish. In 2012, for instance, consumption was up 3.2%. The reasons for the slowdown include higher inflation and interest rates, which respectively impact upon purchasing power and credit operations.
In foreign trade, imports increased by a higher rate (8.4%) than exports, which were up 2.5%. Thus, foreign trade had a negative impact on growth.
Trend
In Brasília, Finance minister Guido Mantega stated that the GDP performance in 2013 saw an improvement in quality, driven by investment.
Mantega said the growth goes to show that the economy is on a gradual acceleration trajectory in relation to 2012. He said the result will remain as a trend in 2014. “It is important to note that the growth in 2013 was quality growth, since it was driven by investment, among other things.” He believes the rate may be slightly higher this year, and that investment should keep growing.
According to the minister, despite the lacklustre results shown by industry in the past two years, the sector may go back to playing a key role in years to come. “Industry suffered as a result of lack of market dynamism on a global level, not only in Brazil: the sector may grow further as exports go up as a result of the more favourable exchange rate.” The US dollar has sharply increased in value against the Brazilian real over the past year.
According to Mantega, the future outlook will hinge on exchange rate stability, growing investment and capital inflows to the country. Brazilian businessmen may also enjoy more credit overseas, according to him.
Comparison
The growth of Brazil’s economy, however, fell short of the global average estimate from the International Monetary Fund (IMF), which is 3%.
Still, the GDP of Brazil had one of the highest increases among the world’s largest economies. The country grew by a lesser rate than China (7.7%) and South Korea (2.8%), for instance, but more than the United States (1.9%), the United Kingdom (1.9%), South Africa (1.9%), Japan (1.6%), Mexico (1.1%), Germany (0.4%), France (0.3%) and Belgium (0.2%). The economy of the entire Eurozone was up by only 0.4%.
*With information from the ANBA Newsroom. Translated by Gabriel Pomerancblum
