The Brazilian Institute of Geography and Statistics announced the official GDP growth rate for 2017: +1.0 percent. While it might not be much, it does signal the end of the longest recession in Brazilian history. Once again, the agribusiness sector was the motor of the economy, performing 13 percent better than it had in 2016.

GDP per capita was also up, growing by 0.2 percent to 31,587 BRL. Other positive numbers include growth in both exports and imports – by 5.2 and 5 percent, respectively. Most industrial sectors, except for construction, also performed better last year.

On paper, everything seems to be fine. But in reality, Brazilians have yet to feel the effects of an economic recovery. Unlike with other economic crises, Brazil’s economy is not rebounding easily. Over 12.7 million people are currently unemployed, and investment rates remain low, at 15.6 percent of the GDP – it’s the lowest rate since 1996.

The current unemployment rate, 12.2 percent, is higher than expected, even when considering that unemployment traditionally spikes during the month of January, as temp workers hired for the holidays are laid off.

Informal labor remains important in Brazil. The number of unregistered workers rose by 5.6 percent, and the number of self-employed persons went up by 4.4%. Still, according to IBGE, the average income of Brazilian workers was 2,169 BRL – slightly above 2017, when it was at 2,135 BRL.

Investments were pushed down by the construction sector’s poor results, which shrank by 5 percent last year. It was the fourth straight negative year. The sector was impacted by the loss of purchasing power from Brazilians in the last three years, however it didn’t help that all major construction groups have been targeted by Operation Car Wash, having to pay millions in fines.

Not a great recovery from recession

Forecasts by Bradesco indicate that the industrial sector shrank by 2.5, down to 3 percent, in January (the official number will be published on March 6).

According to the available data, the sectors with the poorest performances in 2018 are cellulose, paper, chemical products, and aluminum goods. The latter will be further impacted by the decision announced by U.S. President Donald Trump to raise import tariffs over aluminum (to 10 percent) and steel (to 25 percent).

Brazil’s Ministry of Industry and Foreign Trade expressed “deep concerns” over the announcement, threatening to take the U.S. to the World Trade Organization unless the superpower backpedals. The concern is justified: 80 percent of Brazil’s steel goes to American companies.

Most forecasts have Brazil’s GDP growth at 3 percent, although there is no guarantee that the recovery will be sustained in the future. If that’s the case, Brazil will recover its pre-crisis level only in 2020.

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MoneyMar 02, 2018

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BY Gustavo Ribeiro

An award-winning journalist with experience covering Brazilian politics and international affairs. His work has been featured across Brazilian and French media outlets.