Brasília – With the impact of the new coronavirus in the Brazilian economy, the Central Bank (BC) has revised down its Gross Domestic Product (GDP) growth projection from 2.2% to 0%. The information is in the Inflation Report released quarterly by the institution. But the agriculture growth forecast was maintained at 2.9%.
“The change in the projection is mainly associated to the significant economic impacts resulting from the COVID-19 pandemic. Additionally, lower-than-expected results in economic indicators in late 2019 and early 2020 have affected the expectation for the economic performance in Q1. In the long term, the annual GDP forecast sees a dramatic decline in the GDP in Q2, followed by a significant turnaround in the final two quarters,” the report reads.
According to the Central Bank’s analysis, the growth forecast for Brazilian agriculture reflects an “improvement in grain crops, offset by a mild reduction in the livestock growth estimate due to the impact of the pandemic on both domestic and foreign demand for protein.”
The estimated change in the industry sector was reduced from a 2.9% growth to a 0.5% decline, with smaller growth forecasts across every sector. The processing industry performance forecast went from 2.1% to -1.3%, driven by the forecasted decline in the final demand, especially for durable and capital consumer goods, as well as a likely reduction in supply resulting from the travel restriction measures and shortage of imported raw material in some sectors.
The BC reported that the extractive industry growth forecast slid from 7.5% to 2.4%, given the expectation of a lower demand for iron ore and oil in a slowdown in the world economy. Construction is expected to present a 0.5% decline, from the December growth forecast of 3%, amid a more cautious behavior of both families and the sector’s businesspeople. Regarding the commerce and service sector, the expectation is of stability, from a projected 1.7% growth in December.
The household consumption forecast went down from 2.3% to 0.8%, “reflecting the expected impacts of the pandemic on the consumer’s behavior – as the families are more cautious regarding expenditures – the evolution of the income mass from work, as well as the effects from the social remoteness and travel restrictions.”
Translated by Guilherme Miranda
