Letter IEDI n. 1140—Other obstacles
With the advance of vaccination against COVID-19 and its effectiveness in the face of waves of contagion by new variants, in early 2022 the direct effects of the pandemic on the level of economic activity eased, giving consistency to the normalization of companies and sectors. Other obstacles, however, have arisen and are unlikely to leave the picture quickly.
These include: the strong acceleration of inflation, which ended up leading to an increase in interest rates in the country; high unemployment and, even among employed people, a lot of underutilization due to insufficient hours worked; and the reemergence of bottlenecks in production chains with the war in Ukraine and new COVID-19 outbreaks in China.
As a result, the purchasing power of the population fell, taking breath away from the revival of household consumption, which represents something like 60% of the country's GDP. Compared to the situation a year ago, this movement has mainly hampered consumption and production of goods. Services, more demanded by higher-income families and companies, have preserved a certain dynamism, helped by very low bases of comparison in some branches.
Thus, although the industry grew 0.7% from Jan'22 to Feb'22 (with seasonal adjustment), it declined 5.8% in the first two months of 2022 against the same period of 2021. It is a drop of the same magnitude as in the final quarter of last year, signaling no recent progress. In broad retail trade—which includes sales of vehicles, auto parts and construction material—the result was -0.6% in Jan–Feb'22.
Only the service sector did well compared to the beginning of last year, registering an increase of 8.5% in its real revenue in Jan–Feb'22, without much deceleration in comparison to the result of Q3'21 (+9.4%). But when looking at services provided to households and air transport, very far from the pre-pandemic mark, we see that there is still room for the sector to grow more.
In the case of the industry, the difficulty of obtaining parts and pieces continues to prevent a better performance. Durable consumer goods, whose production process involves the use of a large number of components, many of them imported, tend to suffer more. So much so that the sector posted a 21.6% drop in Jan–Feb'22 and is 26.2% below the pre-pandemic level (of Feb'20).
In all, 73% of industrial branches and 60% of regional parks were in the red in Jan–Feb'22 compared to the same period last year. Of the 9 regional industrial parks that were negative, 6 point to more intense falls than in the last quarter of 2021, such as Pará, Ceará, Minas Gerais and Rio Grande do Sul, just to mention a few examples. São Paulo's industry does not belong to this group, but the attenuation of its fall was small and it did worse than the national average.
Retail, on the other hand, grew again between Jan'22 and Feb'22, remaining above the pre-pandemic figure, but here there is also a deterioration when comparing the current situation with the previous year. In the first two months of the year, its real sales registered -0.1% in the narrow concept and -0.6% in its broad concept.
Of the 10 retail branches identified in the IBGE survey, half were in the red. The strongest setbacks were in furniture and households appliances (-11.9%), construction material (-8%) and office, computer and communication equipment (-7.4%). Of these, only construction material is above the pre-pandemic level.
In services, the good performance counted on the contribution of the branches of professional, administrative and complementary services (+7.4% compared to Jan–Feb'21), in good measure due to activities of lower qualification in general outsourced by companies, and transportation and mail (+14.5%), helped by the significant increase in air transport (+47.8%).
Services provided to households, despite a certain slowdown in Jan–Feb'22 with the reinforcement of comparison bases, continued to expand at expressive rates in relation to a year ago (+18.5%). Information and communication services (+3.7%) also slowed down, but in this case they are already 8.6% above the pre-pandemic level.