Preview of GDP surprises and registers an increase of 0.6% in July

Central Bank Economic Activity Index grows for the second month in a row after the relaxation of social isolation measures

Pixabay/Creative CommonsDespite the positive result, the performance was weaker than the 1.14% increase registered in June

O Central Bank Economic Activity Index (IBC-Br), considering the preview of the Gross Domestic Product (GDP), advanced 0.6% in July, compared to the previous month, according to data released this Wednesday, 15. The result came above the expectations of the financial market, which expected a 0.35% increase, and represents the second month followed by advance. In June, the index rose by 1.14%. In relation to the same month last year, the growth was 5.53%. In the accumulated result for the year, the IBC-Br presented growth of 6.8%, while in the last 12 months, the indicator adds an increase of 3.26%. The IBC-Br accumulated a drop of 0.2% in the quarter ended in May. In parallel to the same period in 2020, however, the index increased 9.44%. The increase in the Central Bank indicator comes amid the relaxation of social isolation measures. The reflex of the relaxation of the rules imposed to try to stop the advance of the pandemic of new coronavirus was also captured with the advance of 1.1% of the services provision in July, according to data released this Tuesday, 14, by Brazilian Institute of Geography and Statistics (IBGE). The result — the best level in five years — was driven by the services provided to the family, one of the most impacted by mobility restrictions.

The IBC-Br is seen by analysts as an antecedent of GDP, even if the methodology used by the Central Bank differs from that used by the IBGE, which is responsible for disclosing the national economic activity every three months. GDP fell by 0.1% in the second quarter, compared to the previous three months, when growth was 1.2%. While the BC analysis takes into account variables from the service, industry and agribusiness sectors, the IBGE result is the sum of all goods and services produced in the country. The Brazilian economy had a historic drop of 4.1% in 2020, mainly influenced by the Covid-19 pandemic and the retraction of the world economy due to restrictions on the circulation of products and people. High inflation, high unemployment and the water crisis led analysts to retreat from economic growth projections for this year and 2022. Focus Bulletin released on Monday, 13, show that the expectation for the GDP of 2021 year dropped from 5.15% to 5.04%. For next year, estimates dropped from 1.93% to 1.72%.

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