Brazil GDP down 4.1pc in 2020, less than forecast

BRASILIA: Brazil's economy shrank last year by 4.1% amid the pandemic, data showed on Wednesday, the worst drop in decades, but not as much as originally expected due to cash transfers to the poor.

Latin America's largest economy grew by 3.2% in the fourth quarter, according to official statistics agency IBGE, more than the 2.8% median estimate in a Reuters poll of economists.

The full-year 4.1% drop was the worst since the current IBGE series began in 1996. The 2020 plunge was also the worst since a 4.35% fall in GDP recorded in 1990, according to central bank data going back to 1962, and the third-steepest in that series.

Among the gloomiest forecasts at the onset of the pandemic, the World Bank and International Monetary Fund estimated that Brazil's 2020 GDP would shrink by 8% and 9.1%, respectively.

The 3.2% expansion in the fourth quarter was led by 2.7% growth in services, 3.4% expansion in household consumption, and a 20% surge in fixed business investment, IBGE said.

Over the course of the year, however, only agriculture showed positive growth, up 2% from 2019. Services and household consumption fell 4.5% and 5.5%, respectively, due to COVID-19 and restrictions to combat its spread.