‘Preview’ of BC GDP points out that economy grew 1.06% in August, 4th month in a row | economy

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The Brazilian economy grew for the fourth consecutive month in August, according to figures released on Thursday (15) by the Central Bank.

The Economic Activity Index (IBC-Br), considered a “preview” of the Gross Domestic Product (GDP), registered growth of 1.06% in August, in comparison with July. The number was calculated after seasonal adjustment, a kind of “compensation” to compare different periods.

In comparison with August last year, however, the indicator registered a contraction of 3.92%, informed the Central Bank.

Besides that, the numbers point to a slowdown in the pace of growth. In July, the economy advanced 3.71% (revised figure) compared to June.

Evolution of the IBC-Br

In%, compared to the previous month (after seasonal adjustment)

Source: Central Bank

Also according to the BC:

  • With the growth registered in August, the IBC-Br reached 134.05 points, below the level of February, that is, before the pandemic (139.92 points);
  • In the accumulated index of the first eight months of this year, the economic activity index registered a decrease of 5.44% – without seasonal adjustment.
  • In 12 months to August 2020, there was a fall of 3.09% – also without seasonal adjustment.

The results of the IBC-Br, this year, reflect the effects of the pandemic of the new coronavirus, felt with greater intensity in the economy in March and April. From May onwards, the numbers show the beginning of a reaction.

GDP is the sum of all goods and services produced in the country and serves to measure the evolution of the economy. The official result is released by the Brazilian Institute of Geography and Statistics (IBGE).

IMF reduces forecast for GDP decline in 2020

  • According to IBGE data, Brazilian GDP fell 9.7% in the 2nd quarter, compared to the first 3 months of the year, due to the impact of the coronavirus crisis;
  • Economists at financial institutions projected, last week, a 5.03% drop in GDP and 2020 results;
  • In July, the Brazilian government maintained the expectation of a 4.7% decline in GDP for 2020;
  • The World Bank, for its part, predicts a 5.4% drop in the economy this year and the International Monetary Fund (IMF) estimates a fall of 5.8% in 2020.

The results of the IBC-Br are considered a “preview of GDP”. However, they did not always show proximity to the official data of the Gross Domestic Product.

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 the BC to define the country’s basic interest rate. With the slower growth of the economy, for example, there would theoretically be less inflationary pressure.

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