• At a glance

• Brazil’s Gross Domestic Product - GDP hit R$ 9 trillion in 2021, a rise of 4.8% from 2020. Per capita GDP reached R$ 42,247.52.
• Industry increased by 5.0%, Services, by 4.8% and Agriculture was stable.
• Final expenditure increased by 3.3%. Household final consumption expenditure grew by 2.9% and government final consumption expenditure, by 4.2%.
• In 2021, Gross Fixed Capital Formation (GFCF) grew by 12.9%, after a drop by 1.7% in 2020. The investment rate was 17.9.
• Gross value added increased by 4.5%. In terms of impact, 3.4 p.p. were due to the expansion of Services, and 1.1 p. p. of Industry.
• In 2021, 11 of the 12 activity groups were stable or recorded increase. In 2020, seven of the 12 groups had dropped.
• Net borrowing of the Brazilian economy was R$213.5 billion, a rise of 165% in relation to 2020, when it reached R$80.5 billion.
• The share of gross operating revenue in reached its highest level in the time series initiated in 2000, with a change from 35.3% of the GDP in 2020 to 37.5% in 2021.

In 2021, Gross Domestic Product (GDP) in Brazil increased by 4.8%, having recovered the drop of 3.3% in 2020, resulting from the COVID-19 pandemic. Value added of services increased by 4.8%, driven by the recovery of household expenditure (2.9%). At current values, GDP reached R$9 trillion and per capita GDP, R$42.247,52. The data are from the IBGE’s System of National Accounts.

“The resumption of face-to-face services that had been interrupted in 2020, including travel and entertainment, account for part of the growth. Also significant is the increase of certain industrial segments, such as vehicles and machinery and equipment, and construction material,” explains Cristiano Martins, manager of goods and services of National Accounts at the IBGE.

The GDP in 2021 was revised from 5.0% to 4.8%. The reviion resulted, mainly, from the incorporation of new data on Services, made available by the IBGE’s Annual Survey of Services (PAS). The increase of Services was revised from 5.2% to 4.8%, mainly in the case of Transportation, storage and mailing (from 12.9% to 6.5%). The drop in Industry was revised upwards from 4.8% to 5.0%, whereas the growth in Agriculture was revised from 0.3% to 0.0%.

GDP growth resulted from the 4.5% increase of value added, of which 3.4 percentage points (p.p) come from Services and 1.1 p.p, from Industry.

In 2021, eleven of the twelve groups of economic activities either rose or remained stabled, especially information and Communication (13.9%) and Construction (12.6%).

Change of gross value added (%)
by economic activities

Household consumption increased by 2.9%

In 2021, final consumption expenditure, which encompass household consumption, government and non-profit institutions, dropped by 3.3%, after a drop of 4.4% in 2020. Government final consumption expenditure, which encompasses the expenditure with goods and services supplied by the government to the public, increased by 4.2%. Household consumption expenditure, which represents 60.1% of the GDP, increased by 2.9%. The change of prices of goods and services consumed by households was 11.9%.

A comparison between the participation of goods and services in household final consumption shows thta, in 2021, services increased by 4.0%, whereas goods did by 1.9%. The bigger increase of goods and services did not make up for all the decrease observed in 2020 as a result of the pandemic, when the most affected services dropped by 10.2% and goods fell by -0.7%.

Gross Fixed Capital Formation increases by 12.9%

Gross fixed capital formation - GFCF of the Brazilian economy grew by 12.9% in 2021. The current value of GFCF reached R$ 1.6 trillion and the investment rate, which is the ration between GFCF and GDP reached 17.9%, having increased by 1.3 percentage points from 2020.

The increase of GFCF for Machinery and equipment was 11.1%. The group Construction increased by 11.9%; Intellectual property products, by 23.9%, whereas GFCF of Other fixed assets increased by 7.7%.

In 2021, the group Machinery and equipment surpassed Construction with the main contribution to Gross Fixed Capital Formation, and its participation grew from 41.5% to 43.8%. Construction accounted for 41.% of GFCF; Intellectual property products, for 12.1%, and Other fixed assets, for 2.2%.

Share of compensation of capital in GDP reaches its peak in the time series

GDP from the perspective of income is measured by the sum of compensation of production factors, that is, the income generated in the period plus product taxes net of subsidies over production and imports. In 2021, there was an increase in the GDP share of gross operating revenue (from 35.3% in 2020 to 37.5% in 2021) and etaxes net of subsidies over production and imports (from 14.5% to 15.5% of the GDP). On the other hand, there was a reduction of the share of compensation (39.2% of the GDP) and gross mixed income (7.8%).

“The participation of gross operating surplus in the GDP hit a record in the time series that started in 2000. This performance was mainly related to the performance of gross value added of mining and quarrying and manufacturing industry, besides agriculture, which recorded the main changes in price. On the other hand, the share of compensation in total GDP had decreased since 2017, and reached 39.2% of the GDP in 2021, having returned to the level of 2005. Compensation encompass salaries and social contribution, which accounted, respectively, for 31.0% and 8.2% of the GDP. In 2021, the share of gross mixed income fell to its lowest level in the series.

Net borrowing of national economy rises by 165%

The need of funding of the national economy reached R$ 213.5 billion in 2021, with an increase of 165% from 2020, when it was R$ 80.5 billion.

The foreign balance of goods and services remained positive, with a change from a surplus of R$ 46.0 billion in 2020 to R$ 50.7 billion in 2021.

Net borrowing of non-financial companies hits record figure: R$321.8 billion

The sector of non-financial companies had, in 2021, the highest net borrowing in the series that started in 2000: R$ 321.8 billion at current prices.

The manager of institutional sectors of National Accounts, Teresa Bastos, explains that “it happened due to the increase of 35.0% in Gross Fixed Capital Formation of non-financial companies in 2021”. Gross Fixed Capital Formation in financial companies reached a figure of R$ 940.9 billion in 2021, the highest figure at current prices.

The sector of financial companies recorded nominal increase in net lending (2.8%), with a change from 216.9 billion, in 2020, to R$ 222.9 billion, in 2021. A contribution to this result of expansion against the previous year came from the insurance sector. Value added of the insurance sector dropped by 22.6% in 2021 mainly due to the drop in production value (10.3%) and to an increase of 3.2% in intermediate consumption.

The drop of this production value of insurance is related to the rise of expenses in the subsector of complementary health services. This result was driven by the increased demand for medical appointments and exams after the worst year of the COVID-19 pandemic.

The growth of GFCF by 23.7% in the sector of financial companies in 2021 “suggests the continuation of expansion of investments in information technology, in order to expand the digitization of operations, mainly in the banking sector,” the manager explains.