Wednesday, April 14, 2021

2020 GDP exceeds expectations, but already takes its toll

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Despite being negative, the GDP of 2020 exceeded market expectations – which were not so high. While Brazil’s prime countries record double-digit contractions, such as Argentina and Mexico, here, the Gross Domestic Product dropped “only” 4.1%, just below the United States, which fell 3.5%.

“Despite being a strong drop, in the end the result was not as bad as it seemed, especially if we take into account the way Brazil faced the pandemic”, explains Juliana Inhasz, coordinator of the economics course at Insper. “We spent less than other big economies, the isolation measures were not implemented as well … Within this context, a fair price is coming, within the expected.”

The result of the last quarter was also surprising. While the market projected an increase of around 2.8%, the final figure was 3.2%, driven by household consumption, still under the effects of emergency aid, and services. This increase creates a statistical load for 2021 that, supposedly, would facilitate a recovery scenario at the beginning of the year.

“If in the 1st semester I earn R $ 100 per month and in the second, R $ 120, my average salary in the year is R $ 110 reais. In the following year, even though my salary remains at R $ 120, my average annual salary rises to R $ 120 – a gain in relation to the previous average. This is the statistical load: when the year ends up high, the average against average is positive “, explains Étore Sanches, chief economist at Ativa Investimentos.

For Sanches, this good perspective brought by the cargo may deteriorate with elements that would destroy capital beyond what was expected, such as a worsening pandemic or a long delay in vaccination – exactly what is happening now, when death records contrast with meager numbers vaccination.

“The increase in the circulation of people reactivates services and throws the variation in GDP upwards. It happened in the 4th quarter, also due to the extra income at the end of the year. But we see now that this was a one-off movement. expectations of an improvement in the economy should give way “, analyzes Inhasz. “We put the chips on events that were not so solid, and that creates this distorted perception.”

Senior researcher at the Brazilian Institute of Economics at FGV (Fundação Getúlio Vargas), Silva Mattos agrees with Juliana, and expects some sign of economic recovery only in the second half, if the current chaos is already the peak of the second wave and the pace of vaccination accelerates. . “Still, I say this with great uncertainty, because we live in a time of many populist economic policies that worsen financial conditions in the short term and projections for the post-pandemic,” she explains, assessing that the government was overly optimistic when betting on V recovery.

You look at the world, see it improving and think that we will follow the same trajectory. This breathlessness [no 1º tri/21] it happens because we are unable to keep the economy financed by the public sector, as it happens in Europe. We spent all the ammunition thinking that the war would be quick, but it is not happening. We should have strategically invested in vaccines, which is not only a health policy, but also an economic one – the best weapon against the pandemic.

Silvia Matos, Senior Researcher at FGV’s Brazilian Institute of Economics (Fundação Getúlio Vargas)

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