Industry and services leverage growth of 0.4% in GDP in Q2

Section: Economic Statistics | Eduardo Peret

August 29, 2019 09h00 AM | Last Updated: August 29, 2019 11h55 AM

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Manufacturing industry rose 2.0% in Q2 Photo: Marcelo Benedicto/IBGE News Agency

The Gross Domestic Product - GDP increased 0.4% in the second quarter of 2019 over the previous quarter. This result was mainly leveraged by the gains in industry (0.7%) and services (0.3%). On the other hand, agriculture dropped 0.4%. The increase was of 1.0% compared with the second quarter of 2018. The information, which is part of the System of Quarterly National Accounts, was released today by the IBGE.

The GDP added up to R$1.78 trillion at current values. Compared with the first quarter, the growth in industry was influenced by the expansion in the manufacturing industries (2.0%) and construction (1.9%). Conversely, the mining and quarrying industries retreated (-3.8%) in this period.

"Together, manufacturing industries and construction accounted for nearly 70% of this sector. In addition, the manufacturing industry weights in the segment of capital goods, which contributes to the domestic and foreign investments", explains Claudia Dionísio, IBGE manager of National Accounts.

 In services, the positive figures came from real estate activities (0.7%), trade (0.7%), information and communication (0.5%) and other activities (0.4%).

Under the point of view of expenses, the positive changes came from household consumption expenditure (0.3%) and gross fixed capital formation (3.2%), whereas government consumption expenditure declined 1.0%.

Despite the record drop in the mining industry, GDP increases 1.0% over Q2 2018

The GDP increased 1.0% compared with the second quarter of 2018, the tenth consecutive positive figure in this type of comparison. Agriculture changed 0.4%, thanks to crops like cotton and corn, whose estimates of annual production rose 32.5% and 21.4%, respectively.

Industry expanded 0.3%, mainly due to the activity of electricity and gas, which increased 2.4% as a result of the effect of the tariff flags. Construction rose 2.0%, the first positive figure after 20 consecutive quarters of drops in this basis for comparison. The manufacturing industries also rose (1.6%) compared with the same quarter a year ago. On the other hand, the mining and quarrying industries (-9.4%) registered its steepest drop in the time series.

"Mineral extraction still suffers the effects of Brumadinho and the inspection of other dams. Rainfall in Pará also impacted the iron ore industry", explains the manager of National Accounts.

Services increased 1.2%, highlighted by information and communication services (3.0%) and real estate activities (2.7%). Wholesale and retail trade (2.1%) also rose.

On the demand side, household consumption remains leveraging the advance with an expansion of 1.6%, the ninth consecutive quarter of positive figures. The Gross Fixed Capital Formation advanced 5.2%.

"Once again, household consumption influenced the demand, besides leveraging the increase in the retail trade. Conversely, the wholesale trade increased due to the manufacturing industries, especially basic metals and production of machinery and equipment. Together with the imports, the domestic production of capital goods and construction explain the acceleration of the Gross Fixed Capital Formation", concludes Claudia Dionísio.