For the first time in 17 years the Brazilian economy contracted in 2009, falling by 0.2%, the Brazilian Institute of Geography and Statistics (IBGE) said Thursday. It was the first annual contraction of GDP since 1992.
The IBGE said that while the industrial and agricultural sectors were hit hardest the services sector ended up gaining in 2009.
Brazil’s GDP fell to US$ 1.77 trillion, leaving the country of 190 million with a per capita GDP of US$ 9.263, the institute said. In 2008, Brazil’s GDP stood at 1.8 trillion dollars.
“It was a good performance, because most countries had strong negative growth last year. Brazil had a reasonable result, if we take into account the scenario of capitalism’s worst crisis in the last 80 years,” Brazilian Finance Minister Guido Mantega told a press conference.
The drop reflects the effects of the global economic crisis, which was strongly felt in Brazil during the first few months of 2009. However, fourth-quarter figures show a vigorous recovery.
According to the IBGE report, GDP grew by 2% in the October to December period over the previous quarter. Growth was as high as 4.3% when compared with the same quarter of the previous year at the most acute phase of the crisis.
Brazilian industry contracted by 5.5% in 2009, although it recovered towards the end of the year, while agriculture also shrank by 5.2%. Only the service sector grew by 2.6%.
Mantega predicted growth by over 5.7% for the Brazilian economy in 2010.
The minister’s optimism was shared by the powerful Federation of Industry of the State of São Paulo (FIESP), which said Thursday that the IBGE’s data “show that the country has overcome the crisis.”
“We are in recovery, and there is no reason why that should not continue,” said Paulo Francini, director of FIESP’s economic research department.
Francini stressed, however, that the process could be jeopardized if the Brazilian Central Bank opted to raise the basic interest rate, which currently stands at 8.75%.