Apparently, 2022 was the year of services. This is what the data released by the IBGE suggest, as they show that only the service sector recorded an increase in real revenue in Jan–Dec'22 (+8.3%). Industrial output (-0.7%) and retail sales (-0.6%) were in the red.

The decline of these activities was quite concentrated in durable consumer goods, which are precisely those most negatively impacted by the rise in interest rates in the country. It is worth remembering that the base interest rate, Selic, went from 9.25% p.a. in Jan'22 to 13.75% p.a. in Aug'22, remaining at this level until the present.

Thus, the purchasing power of the population, already affected by unemployment, high levels of debt and by the acceleration of inflation, was also constrained by the rise in the cost of credit, contributing to the postponement of purchases of durable goods. 

In addition, there is also an interaction between the expansion of services and the fall in transactions in goods. Higher-income households, whose consumption of services is more important, may have redirected their durable goods demand in favor of services as the COVID-19 pandemic was controlled by greater vaccination coverage.

In the industry, among the supply factors, the production of durable consumer goods is also quite vulnerable to bottlenecks in supply chains, since it consists of assembly lines with numerous parts and components, many of them imported. 

The industrial macro-sector of durable consumer goods shrank 3.3% in 2022, that is, almost five times more intensely than the general industry. In retail, sales of vehicles and auto parts fell 1.7% and furniture and appliances registered -6.7%. Construction material (-8.7%) and other articles for personal and domestic use (-8.4%), which includes sales made on credit, were among the largest retail losses.

Altogether, of the 26 industrial branches identified by the IBGE, 65% lost production in 2022, with almost ¼ of them with double-digit declines. In turn, of the 10 branches of retail, half were in the red and among those that grew, the dynamism was very concentrated in fuels and lubricants, whose sales were encouraged by the tax reduction.

Regionally, although with a slightly better distribution, the falls reached most industrial parks: 53% of the locations identified by the IBGE. The Northeast industry (-1.0%) was a negative highlight, as it has not grown since 2013. São Paulo, in turn, barely moved in 2022, registering only +0.2%. In retail, the picture was more favorable: only 1/3 of states had a contraction in sales.

In services, there was expansion in 80% of the branches and in 96% of the states in 2022 as a whole. The strongest increase was due to services provided to households (+24%), greatly reducing their gap in relation to the pre-pandemic level. Transport and postal services showed the second best performance, driven by air transport (+28.6%); professional, administrative and complementary services progressed 7.7%. All these branches received an important boost from the resumption of face-to-face activities and greater mobility of people with COVID-19 under control.

Thus, if the Central Bank's IBC-Br index, which acts as a proxy for GDP, points to an expansion of 2.9% in 2022, it is due only to the dynamism of services, greatly leveraged by low bases of comparison and pent-up demand. For 2023, the latest projections of the Focus Bulletin point to a much weaker picture: +0.84%.

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