Letter IEDI n. 1131—Industrial reaction in 2021: only in intermediate technological groups
In 2021, manufacturing production increased compared to 2020, but not enough to fully offset previous losses. It registered +4.3% last year against -4.6% in 2020, when the COVID-19 pandemic hit Brazil. Today's Letter IEDI analyzes this evolution based on the methodology used by the OECD, which classifies the sector into four technology intensity ranges.
Of the four categories identified, two failed to grow last year. The worst result was seen in the high-tech industry. After contracting 3.2% in 2020, it fell again in 2021, registering -2.9%, under the influence of both electronics and pharmaceuticals.
Another category in the red was the medium-low technology intensity, whose output shrank 0.1% in 2020 and 1.2% in 2021. Much of this was due to fuel and petroleum-derivatives and food products, whose prices in both cases saw a significant rise throughout the year. In addition, the category also concentrates several semi-durable and non-durable consumer goods sectors, which are more harmed by high unemployment and the loss of purchasing power of the population.
These two groups, however, converge with the other technology intensity ranges regarding the performance at the end of last year. All recorded a decrease in dynamism and in the case of high and medium-low tech, what was already negative became even more negative. In Q4'21, the high-tech industry fell 11.9% compared to Q4'20 and the medium-low-tech industry dropped 6.5%.
While the extremes of the industry's technology intensity scale did not recover in 2021, the intermediate groups pulled the reaction of manufacturing. Both medium and medium-high technology grew at a double-digit pace: +10.4% and +13.6%, respectively.
The increase in medium-high output, which was the best performer in 2021, was mainly due to the production of capital goods: +24.4% in machinery and equipment and +4.4% in electrical appliances and equipment. The chemical industry was also in the black, as was the automobile sector, although the latter did not compensate for the fall of 2020.
As for the medium technology intensity category, the increase in production was influenced by the good result of metallurgy (+15.4% in 2021) and non-metallic minerals (+14.0%). Rubber and plastic products (+4.3%) also managed to grow, although at a more modest pace.
Also in these cases, as previously mentioned, although they followed a recovery trajectory in 2021 as a whole, the end of the year brought negative signs. After the period of very depressed bases of comparison, it became more difficult to maintain positive results.
The medium-high technology industry fell 5.1% in Q4'21 and, despite the setback, it still remained the best performing group in the period. On the other hand, the medium technology intensity range decreased 7.9% in the last quarter. In the first case, the greatest influence came from the automobile industry (-10.9%), while in the second the losses reached all branches, especially: -4.1% in metallurgy and -13.7% in rubber and plastic.