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Drop in crops leads to retraction in the South Region in the first quarter

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The South Region suffered a retraction in economic activity in the first quarter of the year, impacted by the severe drought and intense heat, which compromised the development and productivity of crops. The assessment is from the Central Bank (BC) and is included in the Regional Bulletin, a quarterly publication that presents the conditions of the economy by regions and by some states in the country, released today (11).

According to the BC, the main constraints of the economy of the South recorded mixed results in the first quarter of 2022. “While trade and services contributed positively, the slowdown in industry and, mainly, the reduction in agricultural production led to the retraction of activity at the margin ”, says the publication.

The Southern Regional Economic Activity Index (IBCR) fell by 2.8% in the first quarter of the year, compared to growth of 1% in the previous quarter. In the 12 months through March, the indicator expanded 4.2%, “still favored by the depressed basis of comparison”.

“The shortfalls in the harvests of soybeans, rice and the first corn crop, which are appropriate at the beginning of the year, were the fundamental causes of the decline”, evaluated the BC. “According to state indicators, the decrease in regional activity was led by RS, primarily due to the fall in summer crops”, he adds.

There was also a less intense retraction in the North, and a slowdown in the economy in the Midwest.

The IBCR of the North changed negatively by 0.2% in relation to the previous quarter, when it increased by 0.2%, influenced by the retraction of the mineral industry in Pará, according to the BC. The indicator from Pará dropped 2.2% on the same basis of comparison, while that of Amazonas expanded 2.1%, driven by the increase in consumption of services. In 12 months, the IBCR do Norte accumulated growth of 3.8%.

The economy of the Midwest sustained a positive performance in the first quarter of 2022, with the IBCR showing a rise of 0.7% compared to the previous quarter, when it grew by 1.6%. “Agriculture, the transformation industry, commerce and public administration stood out during the period. The agro-industry has benefited from the seasonal dynamics of the soy complex”, says the Regional Bulletin. In the 12-month period, the region’s IBCR grew 4.9%.

best performances

The Northeast and Southeast regions performed well, influenced by the positive evolution of industry and services.

According to the BC, economic activity in the Northeast maintained a significant pace of expansion in the first quarter of 2022. The IBCR of the Northeast grew 1.8% in the period, above the level recorded in the previous quarter, of 1.5%. The highlights are the manufacturing industry and service activities. “Labor market conditions continue to improve, in an environment of falling unemployment rates”, says the document. In the 12 months through March, the activity index expanded by 4.6%.

In the Southeast, economic activity also accelerated at the beginning of the year, reflecting the positive performance of commerce and industry and stronger growth in services. The Southeast IBCR increased 1.7% in the first quarter, in relation to the immediately previous one, when it grew by 0.6%.

“Among the states, the largest contributions came from SP (1.9%) and MG (1.8%), also highlighting the growth of the Espírito Santo economy (3.4%), driven by the performance of the industry”, explained the BC . In the 12-month period ended in March, the economy of the Southeast recorded expansion of 4.9%, “largely due to the reduced basis of comparison”.

national assessment

Nationally, for the Central Bank, the pace of economic activity surprised positively in the first quarter, with a more homogeneous performance among activities. Inflation, on the other hand, continued under pressure, mainly reflecting increases in food and fuel prices

The Gross Domestic Product (GDP, the sum of all goods and services produced in the country) in the period showed a higher-than-expected pace of activity, with growth of 1% in relation to the previous quarter, the third consecutive increase. In the same sense, the Economic Activity Index of the Central Bank – Brazil (IBC-Br) changed 1% in the first quarter of the year.

“Industry, commerce and services conjuncture indicators showed positive results, in line with the continuity of the process of normalization of activities most affected by the pandemic, the trajectory of recovery of the labor market and the expansion of household consumption. On the negative side, agriculture declined in the first quarter, reflecting the partial drop in the soybean crop – a product with a high share in the sector and with a harvest concentrated at the beginning of the year”, says the Regional Bulletin.

“Prospectively, new incentives for family consumption – extraordinary withdrawal of the FGTS and anticipation of the 13th salary of INSS retirees and pensioners – and the prospect of progress in agriculture and the extractive industry, after declines at the beginning of the year, reinforce the expectation of growth activity in the second quarter”, assessed the municipality.

Translated to english by RJ983

From Brazil, by EBC News

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