Brazil‘s economy shrank last year by 4.1% amid the COVID-19 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.
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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.
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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.
