Brazilian GDP plummets 9.7%, the biggest drop recorded by IBGE in the last 25 years #PIB

 The IBGE announced today that the country's Gross Domestic Product (GDP) amounted to R$ 1.653 trillion from April to June 2020, shrinking 9.7% in relation to the first quarter of the same year. This is the lowest result since the beginning of the historical series, in 1996. The accumulated drop in the first half was 5.9%.

This drop in Brazilian GDP has made the country economically regress in more than a decade, returning to the level of 2009. An unprecedented tragedy. According to IBGE, household consumption, which represents 65% of GDP, had a record decrease of 12.5% in the period.

It is important to remember that at the beginning of the year, Brazilian Economy Minister Paulo Guedes said that the country would grow by around 1% in 2020 and that only 5 billion would be needed to deal with the pandemic. Both predictions are gigantic errors, so far the government has spent more than half a trillion Reais on aid to the poorest Brazilians and even so the country has not managed to escape from a technical recession. As for the 1% growth, even before the pandemic, the country, according to the IBGE, was already finding itself downhill economically. After correcting the figures for the first quarter, the IBGE indicated that even before the pandemic, Brazil's economy had already fallen by 2.5%.

IBGE: In 3 months, the number of unemployed in Brazil grows 3 million

According to data from Pnad Covid, released by the IBGE, between the first week of May and the last week of July, more than three million Brazilians were unemployed, that is, they sought employment and did not find it - thus, the unemployment rate went up from 10.5% to 13.7% in the period.

Therefore, it is possible to say that during the coronavirus disease pandemic (COVID-19), at least 3 million people lost their jobs in Brazil.

The numbers are scary, just in the last week of July of 2020, the unemployment rate in Brazil jumped from 13.1% to 13.7%, a growth of 0.6% in just seven days, according to data from the Covid Household Sample Survey (Pnad Covid-19 ), released by IBGE. The unemployed population in Brazil was estimated at 12.9 million people in the fourth week of July.

Meanwhile, the drastic fiscal austerity policy advocated by Economy Minister Paulo Guedes is losing ground within the government of Jair Bolsonaro, who has seen his popularity soar due to the 600 reais (little git more than US$100) emergency aid given to the poorest population. It is important to note that Bolsonaro was initially against the aid of 600 reais, which was only approved due to the efforts of federal deputies, mainly from the left parties. Paradoxically, the policy that Bolsonaro opposed ended up benefiting some of the voters, who linked aid to the federal government.

Brazilian services sector closed the second quarter of 2020 with a fall of 15.4%, according to IBGE

 The services sector, the most important in the Brazilian economy, ended the second quarter of 2020 with a decrease of 15.4%, according to the Brazilian Institute of Statistical Geography (IBGE).

The sector was hit hard by the pandemic of the new coronavirus, since some of its main activities had to close its doors due to social isolation measures, such as bars and restaurants, gyms and beauty salons.

In June, the services sector recovered. The sector grew 5% in June, influenced by the easing of social isolation, but even so, the accumulated result is still at a level 24% below the peak of the historical series, recorded in November 2014.

Unemployment in Brazil exceeds 13% after about 9 million workers had been laid off during the COVID-19 pandemic

The unemployment rate in Brazil rose to 13.3%, an increase of 1.1 percentage point (p.p.) compared to the quarter ended in March 2020. As a result, the number of unemployed workers was 12.8 million. The data are from the National Continuous Household Sample Survey (Continuous Pnad), carried out by IBGE (Brazilian Institute of Geography and Statistics).

The number of discouraged reached 5.7 million people, the largest contingent in the historical series. They are people with the potential to work, but who simply gave up looking for a formal job. The majority of them are working in informal jobs or are unoccupied.

According to the newspaper Folha de S. Paulo, "commerce was the sector most affected, with the closing of 2.1 million jobs. In civil construction, there were 1.1 million fewer. Among domestic workers, there were 1 , 3 million layoffs".

Four out of ten Brazilian municipalities have no sewage service, according to IBGE

About 39.7% of Brazilian municipalities do not have sewage service, according to the National Survey of Basic Sanitation (PNSB), released by IBGE.

Despite the growth in the supply of these sewage services, which practically doubled in the last thirty years in the Northeast region of Brazil, from 26.1% in 1989 to 52.7% and from 12.9% to 43% of municipalities in the Midwest region, the provision of basic sanitation services in Brazil is still far from an acceptable level.

According to the Trata Brasil Institute, a survey based on data released by the National Sanitation Information System (SNIS - base 2018), shows that advances in this area are insufficient for Brazil to fulfill national and international commitments in treated water, collection, and treatment of water sewers.

COVID-19 takes down Brazilian industrial production

According to IBGE (Brazilian Institute of Geography and Statistics) today, the coronavirus pandemic led to the fall of industrial activity in the country from February to March. This is what the Regional Monthly Industrial Survey points out. It is the first time in eight years that all 15 surveyed locations have retreated. The closest to this result occurred in May 2018, with the truckers' strike, which brought down industrial production in 14 of the 15 locations.

According to a survey carried out in partnership by the Brazilian Institute of Economics, of the Getulio Vargas Foundation (FGV / Ibre), and The Conference Board (TCB), Iace (Compound Background Indicator of the Brazilian Economy) fell 10.1% in April of 2020 in compared to March of the same year. The index fell from 112.6 to 101.2 points, the biggest drop in the historical series started in 1996.

According to Iedi, Brazilian industry got smaller and smaller in the last 50 years

A survey by the Institute for Industrial Development Studies (Iedi) indicated that Brazil had the third-largest retraction in the industrial sector among 30 countries since 1970, trailing only Australia and the United Kingdom.

Industrial production, the main factor in the development of a country, has lost more space in the Brazilian productive structure. Currently, this sector presents numbers at the same levels as those of the 1910s.

According to the IBGE, after two years of growth, Brazilian industrial production fell by 1.1% in 2019. In the last 50 years, the participation of the Brazilian industrial sector in the national GDP has shrunk from 21.4% to 12.6%.

The El País website reports that "data released this Wednesday (March 4, 2020) reveal that the crisis that has been going on in the Brazilian industry for years has shown no signs of improvement. In the last three months of last year, the industrial sector remained stagnant and advanced 0.1% compared to the previous period.

According to El País, "the retraction further reinforces the downward trend in the participation of the manufacturing industry, responsible for converting raw materials into production and consumption goods, in GDP in recent years. In 2019, the sector that encompasses the plastics, food, beverages, metallurgy, textile industry, among others, represented only 11% of economic activity. Two decades ago, activity accounted for more than 15% of GDP. In 1970, the participation was 21.4%".

Fed cuts interest rates and Covid-19 may lead Brazilian Central Bank to rethink monetary policy and cut interest rates again in Brazil

The Federal Reserve's (Fed) decision to cut interest rates led the Brazilian Central Bank to practically discard the minutes of the institution's last meeting of the Monetary Policy Committee (Copom). In it, the Brazilian Central Bank indicated the end of the process of cutting the basic interest rate (Selic), which currently stands at 4.25% per year, the lowest level in the country's history.

Yesterday, the Brazilian Central Bank issued a new note in which it indicates that the Monetary Policy Committee (Copom) may reduce the interest rate again. This change in Brazilian monetary policy intends to further slow the country's economy, mainly due to the unfolding of the economic crisis generated by the new coronavirus (Covid-19).

Meanwhile, in Brazil, Economy Minister Paulo Guedes insists on long-term reforms (pension reform, administrative reform, and tax reform) to combat short-term economic issues (coronavirus and Fed interest rate cuts).

Concurrently, in Brazil, rains on the coast of São Paulo and Rio de Janeiro cause the death of 19 people and leave hundreds homeless. The labor market in Brazil, according to IBGE, continues to break records in the growth of informality. For this reason, according to the IBGE, "since 2016, the country has shown a drop in the proportion of the employed population that contributes to a social security institute". This may result in the effects of the Pension Reform not having the results expected by the government.

Brazilian industrial production closes 2019 with a drop of 1.1%; informality in the labor market in Brazil is the highest in the last 4 years

Segundo a Pesquisa Industrial Mensal (PIM-PF), divulgada pelo IBGE, "a produção nacional da indústria brasileira recuou 1,1% no ano de 2019, após dois anos seguidos de crescimento em 2017 (2,5%) e 2018 (1%)".

De acordo com o gerente da pesquisa, André Macedo, "das 24 atividades pesquisadas, 16 tiveram queda no ano. A produção industrial pode estar sendo impactada pelas incertezas no ambiente externo e também pela situação do mercado de trabalho no país que, embora tenha tido melhora, ainda afeta a demanda doméstica”.

According to the Continuous National Household Sample Survey (Continuous PNAD), also published by IBGE, informality in the Brazilian labor market, that is, the sum of workers without a license, domestic workers without a license, an employer without a CNPJ, an own account without CNPJ and auxiliary family worker, reached 41.1% of the employed population in 2019. This total is equivalent to 38.4 million people, the largest contingent since 2016. 

According to IBGE, informal work in Brazil reaches the largest contingent since 2016, with 41.4% of the employed population, which corresponds to 38.4 million people

According to the IBGE, Brazil has 11.6 million workers without a formal contract in the private sector, a number that does not include domestic employees. This total represents an expansion of 4% in relation to 2018. This is the highest level of the historical series started in 2012. The number of self-employed workers reached the highest level in the series, rising to 24.2 million, with the most (19.3 million), without CNPJ. The number also represents an increase of 3.9 million people since 2012. In comparison with 2018, the expansion was 4.1% (958 thousand).

Therefore, informality reached 41.1% of the employed population, equivalent to 38.4 million people, the largest contingent since 2016, despite the stability in relation to 2018.

Economically, it is brutal for a country when informality reaches 41% of the labor market. If we take into account the growth of temporary and part-time contracts, Brazil is undergoing a dramatic change for the worse in employment.

It is not possible to consider the fall in the unemployment rate to be positive when it is a direct result of the growth of informality. The reason is simple: selling things on the street and working intermittently 4 hours a day is underemployment.

Brazilian industrial production falls 1.2% in November 2019, according to IBGE

Industrial production in Brazil fell 1.2% in November 2019 compared to October of the same year. This downfall interrupted the upward sequence of the previous three months.

According to IBGE, this is the worst November since 2015, when the industry fell 1.9%, according to the Monthly Industrial Survey, released today (01/09).

There was a reduction in the production of 16 of the 26 surveyed activities. The 1.2% drop eliminates part of the accumulated 2.2% expansion from August to October 2019. With these results, the Brazilian industrial sector is 17.1% below the record level reached in May 2011.

This indicates that many of Brazil's macroeconomic conditions have not changed sufficiently for the current optimism of the government's economic area (Paulo Guedes has even said that the private sector in Brazil could grow by 3% by 2020) and for many economic analysts in the Brazilian media.

In fact, industrial growth in Brazil will be very difficult without strong growth in the rest of the world. Brazil also needs to reverse the country's huge productivity gap.

Informality advances in Brazil; low wages are now the norm in the country

High informality and low wages were the labor market scenario in Brazil in 2019. A survey by Pnad (National Household Sample Survey) indicated that unemployment fell, but with increasing informality and falling average incomes.

According to the Underground Economy Index, calculated by the Brazilian Institute of Economics of FGV (Fundação Getúlio Vargas), informality is still responsible for a significant portion of the Brazilian economy, having moved R$ 1.2 trillion in the 12 months between June 2018 and June 2019, equivalent to 17.3% of Brazilian GDP. This is the highest value in the last eight years. The growth in informality also increases the production of goods and services that are not declared to the government and the tax evasion of the country. In the 12 months between June 2018 to June 2019, the index advanced 0.1%.

This scenario is strengthened by the emergence of new forms of work, with applications that stimulate informality and expand the outsourcing of employment in Brazil.

According to the Institute of Applied Economic Research (Ipea), informal job vacancies are responsible for much of the small generation of jobs in recent years in Brazil. Currently, the country has over 11 million unemployed. Still, according to Ipea, these new informal jobs are behind the drop in productivity and the slow recovery of the Brazilian economy after the recession from 2014 to 2016.

Another problem produced by the high informality in Brazil is the reduction in the level of social security contributions, which worsens the country's fiscal issue. In addition, informality puts people in a situation where there is no fixed income, which limits their access to credit. In informal work, the worker also loses access to any kind of legal protection, does not receive vacation, meal vouchers or transportation allowance, benefits that formal work provides.

Currently, according to IBGE data, Brazil has 38.8 million informal workers. This total is 41% of the total employed persons in Brazil (93.8 million), that is, they represent 4 out of 10 Brazilian workers.

Brazil: poverty grows and inequality increases

According to the IBGE (Brazilian Institute of Geography and Statistics), Brazil's GDP grew by 1.3% in 2018. The latest Focus Bulletin, published last Monday by the Brazilian Central Bank, pointed out that Brazil's GDP growth in 2019 should be around 1.1%. Therefore, if all goes as expected by the experts from the top 100 financial institutions in the Brazilian market, which make up the Focus Bulletin, 2019 will have a lower GDP growth than 2018.

This scenario allows us to say that the Brazilian economy continues at a very slow recovery pace. As the Brazilian GDP advances with very little vigor, it seems that the country's economy should recover pre-crisis level only in 2022.

According to the technical director of Dieese (Inter-Union Department of Statistics and Socioeconomic Studies), Clemente Ganz Lúcio, if the Brazilian economy continues at this pace, it will take a decade for the country to recover the level of employment that existed before the crisis that began in 2013.

Currently, Brazil has 12.4 million jobless people, a rate of 11.6%.

According to Rafael Guerreiro Osório, a researcher at the Institute for Applied Economic Research (Ipea), the country's performance in the areas of income distribution and education pushed performance down. For Osorio, "we are not doing well in education. And this year, we have not seen a proposition of educational policy that promises extraordinary results, if any. In life expectancy, there is no way to change much from one year to another. So the hope would be for income, but our situation today will keep us close to the middle of the ranking." Brazil occupies the 79th position among 189 evaluated nations.

To make matters worse, Brazil has won the terrible title of runner-up in the world this year, second only to Qatar.

According to the newspaper O Estado de Minas, "Brazil is the second most unequal country in the world among those who provide estimates based on tax data, second only to Qatar"

In Brazil, 1% of the richest population (about 1.5 million people) concentrates 23.2% of the share of total income declared by individuals to income tax (in Qatar the richest 1% concentrates about 27% of total declared income).

According to The State of Minas, "the income concentration of this small group of rich people in Brazil is 164% higher than in Sweden, where the one hundredth richest share accounts for 8.8% of the total income. Sweden, from the 1930s until recently, saw the income share of the richest hundredth shrink from 12.3% to 8.8%, in Brazil, over the last nine decades, the distribution pattern has shown a steady and persistent concentration: 1% richer answered between 20% and 25% of the total income".

However, part of the Brazilian financial market, media, and government analysts insist that the Brazilian economy is growing again. For the thousands of Brazilian unemployed and underemployed, this kind of analysis is a kind of derision. For the thousands of Brazilian unemployed and underemployed, this kind of analysis is a kind of derision. While most face a day-to-day world record in homicide, hate crime, incarceration, state violence, unemployment and lack of prospects, part of the country's richest 1% insists that everything is getting better.

Cost of living in Brazil: according to IBGE the poorest half of the Brazilian population lives on R$ 413 a month, which is a little over a 100 dollars

Data published today by the IBGE indicate that 104 million Brazilians, the poorest 50% of the population, "live" with $ 413 per month, something around 100 dollars.

If the cut selects the poorest 30% (60.4 million people), the average monthly income drops to R$ 269, just over 60 dollars per month. Meanwhile, 1% of richer Brazilians have a monthly per capita income of R$ 16,297, or something around four thousand dollars.

IBGE also pointed out that income inequality has reached a record level in Brazil. Over the past few years, the poor have gotten poorer as their incomes fell 3.8% between 2017 and 2018, while the rich got richer as their incomes grew 8.2% over the same period.

Thus, income inequality in the country reached a record level in 2018, within the historical series of the National Continuous Household Sample Survey (Pnad Contínua), initiated in 2012 by IBGE.

Service sector in Brazil records the fifth fall in 2019, according to IBGE

The Monthly Survey of Services, released today by IBGE, indicated that the volume of services fell by 0.2% in August 2019, compared to July, the sector's fifth negative result in 2019. In August 2018, fall was 1.4%. Year-to-date, despite the decline, the sector advanced 0.5%.

In 12 months, there was a loss of pace of recovery, with accumulated growth going from 0.9% in July to 0.6% in August. When considering the entire historical series, which began in 2011, the volume of services in the country is still 12.1% below its best moment, reached in November 2014.

According to IBGE, retail sales, mainly from supermarkets and hypermarkets, prevented retail sales from being negative in August. The volume of trade in this month was 0.1% compared to July, indicating stability. August 2019 was also the third consecutive month that the sector obtained a positive rate, accumulating a high of 1.2% in the year.

Cost of living in Brazil: the country has deflation of 0.04% in September 2019

According to data from the Broad National Consumer Price Index (IPCA), released today by the IBGE, Brazil had, in September, a deflation of 0.04%. This is the lowest result for this month since 1998.

The main factors for this number were the fall in the cost of food away from home, which fell 0.53%, and the fall in the cost of food at home, which fell 0.70%. There was also a fall in-home appliance prices, which was 2.26%, and on TV, sound and computer prices, which was 0.90%.

The National Index of Construction (Sinapi), also released today by the IBGE, grew 0.37% in September. The main reason for the increase was the cost of labor.

The Regional Monthly Industrial Survey, also released today by the IBGE, indicates that after three months of negative rates, the São Paulo industry, the largest in Brazil, grew 2.6% in August, influenced by the increase in sugar production.

The Household Budget Survey (POF) 2017-2018, released today by IBGE, points out that Brazilians are investing less and paying more debt

The Household Budget Survey (POF) 2017-2018, released today by IBGE, points out that Brazilians are investing less and paying more debt. According to the research, households have less budget space to buy assets such as real estate, land, and capitalization bonds, while they need to devote more of their income to reducing their debt and paying taxes.

The survey generally shows a significant shift in household spending priorities since the 1970s. At that time, Brazilians households stamped 16.5% of their spending on "asset growth." This group, it should be noted, does not include vehicle purchase expenses, which are accounted for under the heading “consumption expenses”.

According to the survey, average Brazilian household expenses amount to R$ 4,649.03 per month, of which only 4.1% was devoted to “asset increases” such as the acquisition of real estate, land, and securities. This is a smaller proportion than in previous versions of the survey, such as 2002-2003 (4.8%) and 2008-2009 (5.8%). This means, in practice, that Brazilians are saving less.

Informality breaks the historical record in the Brazilian labor market

According to the National Continuous Household Sample Survey (PNAD Contínua), released today by the Brazilian Institute of Geography and Statistics (IBGE), 41.4% of the employed population is in informality. Of the 684,000 new employed persons, 87.1% entered the job market informally.

Therefore, almost 40 million workers are in informality. According to IBGE data, in the quarter ended in August, Brazil had 38.8 million informal workers. It is the highest level of informality in the Brazilian labor market ever recorded by PNAD Contínua.

A survey by the Getulio Vargas Foundation Social Policy Center and released by the BBC Brazil shows that between 2014 and 2017, Brazil gained a contingent of 6.27 million "new poor". These are people who lost their jobs and started to live in poverty, with income from work of less than R$ 233 per month (around 56 dollars a month). As wages are the main source of income for poor and vulnerable families, poverty in Brazil in the sharpest period of the recession has increased by 33%, and the country's total poverty has risen to 23.3 million, according to the survey.

All this added to the reforms made by the Temer and Bolsonaro governments that continually removed labor rights in what was called labor market flexibility helped to increase informality. Now, in Brazil, many people work but have no vacation, 13 salário, Fundo de Garantia (FGTS). This scenario, contrary to what was promised (to improve the population's life), deepened inequality in the country.

During Michel Temer's administration, then Economy Minister Henrique Meirelles even said that the new labor law would produce over 6 million jobs. Two years after the reform comes into force, instead of the 6 million jobs promised, what is seen is a worsening of workers' quality of life and an increase in informality in the labor market.

In turn, Paulo Guedes, Minister of Economy of the Jair Bolsonaro government, also advocates the creation of a new work card in which workers will not be entitled to benefits earned by various categories under union agreements.

Cost of living in Brazil: the eighth consecutive increase in electricity helps to raise annual inflation preview; inflation in Brazil in the last 12 months was 3.22%

According to the Broad Consumer Price Index 15 (IPCA-15), a survey made by IBGE, the inflation pressured by the eighth consecutive increase in electricity, in September was 0.09%, close to that registered in August (0.08%). With the result, the inflation forecast accumulated high of 2.60% in the year and 3.22% in 12 months. The housing group accounted for the largest price change of 0.76%.

According to the website G1, Transport group prices also rose 0.09%, in August the same group came from a 0.78% drop in August. The result was influenced by the 0.35% increase in fuels. Ethanol and diesel prices rose by 2.15% and 0.58%, respectively, while gasoline fell by 0.06% in Brazil.

IPCA-15 numbers reinforce the favorable inflation scenario assessed by the Brazilian Central Bank in the Copom minutes. The 3.22% increase over the past 12 months is well below the center of the target.

This raises expectations that the Brazilian Central Bank will continue to reduce the basic interest rates of the economy, the Selic. High unemployment and controlled inflation require a policy of cutting interest rates for many economists.

Brazilian services and commerce sectors surprise with unexpected growth but do not recover losses in the year, according to IBGE

According to the Monthly Survey of Services, released by IBGE today (12.09.2019), there was a 0.8% growth in the service sector between June and July 2019, in Brazil. Analysts and economists expected growth of around 0.4%. This is the best result since December 2018. However, despite this slight recovery, Brazil's services sector is still 11.8% below the record reached in May 2014 and 1.2% lower than December last year.

Another sector that posted positive numbers this week was the Commerce sector in Brazil. According to the Monthly Trade Survey, released by IBGE, retail sales in Brazil increased 1% in July, compared to June, and had the third positive month in a row. It is the best result for July since 2013 when the advance was 2.7%.

This scenario reinforces the projections that bet on more cuts in the basic interest rate in Brazil, Selic, by the Brazilian Central Bank's Monetary Policy Committee (Copom) in the coming months.