GDP should retract 0.6 percentage points in the second quarter

The drop is mainly influenced by the lower growth of agribusiness, especially soy, which was largely responsible for the higher-than-expected GDP growth in the first quarter of 2023. The great boost that occurred in the first quarter’s GDP due to soy should not be repeated.

The good performance of the first quarter of GDP is due to a sector that is not very sensitive to interest rates. Agribusiness maintained its performance against the contractionary monetary policy, that is, high interest rates.

Agribusiness was not restricted and took advantage of the potential provided by the super harvest.

This sector accounted for 1.7 percentage points of the 1.9% growth registered in the quarter compared to the previous quarter. The growth of 0.2 pp in the services sector is negatively affected by the tightening of the Selic, the economy’s basic interest rate.

With a large part of the agricultural momentum going out of the picture, as the soybean harvest is concentrated in the first quarter of the year, the data for the second quarter still point to a slowdown, with the service sector, industry and expanded retail — more intensive in credit — registering contraction in April.

Retraction is expected in services (-0.7%), mining and electricity.

In addition, for a lower GDP growth in the second quarter, the poor performance of household consumption and the contraction of investment stand out.

There is also a high degree of uncertainty in the economy.

Inflation, high interest rates and the slowdown in the job market should harm the sector’s growth this year, according to specialists from the FGV.

The industry should register growth of 0.5%.

In services, there is an expansion of 0.6%, against 4.2% recorded in 2022, the year of recovery from the effects of the pandemic.

The statistics are released by the Getúlio Vargas Foundation, the FGV.