With 5% growth forecast, agribusiness should boost GDP in 2022

A farming Brazil should be the main engine of the country’s economy in 2022. A study by the Getúlio Vargas Foundation (FGV), coordinated by professor Silvia Matos, projects that agribusiness in Brazil should grow 5% by the end of this year.

The good expectations for the segment are linked to the improvement of the water scenario compared to last year, when Brazil had the worst water crisis and energy consumption of the last 91 years.

According to data from the National Electric System Operator (U.S), the reservoirs of the Southeast and Midwest subsystem, which represent 70% of all energy generation in the country, registered only 16% of their capacity in September, the height of the drought. For full operation, the ONS points out that an approximate volume of 80% is needed.

“This year, the perspective is that the water issue here in Brazil will not interfere as much as it did in 2021. The sector unfortunately suffered a lot in that period with the lack of rain. But now the scenario is positive and we need to emphasize that, when this sector grows, it benefits many others directly and indirectly, such as transport that moves products within the country”, said FGV economist Silvia Matos.

Despite the good recovery of agriculture, the Gross Domestic Product (START) in Brazil should grow less than 1% in 2022. Sectors relevant to the country’s economy, such as industry and civil construction, should register modest results this year, according to the FGV survey.

According to the survey, the main reason for this shrinkage is the interruption of the production chain due to the Covid-19 and the lack of inputs.

A survey by Safras & Mercado, a consultancy specializing in agribusiness, points out that the agricultural sector is responsible, on average, for 20% of GDP.

The specialist at the consultancy, Luiz Fernando Gutierrez Roque, claims that soy production is the most profitable business for Brazilian agriculture. he explained to CNN the reasons why the input was not affected by the water crisis.

“Soy is the main agro business. The grain had a record export in 2021 of 86 million tons that went abroad. The product was not affected by the lack of rain. This is because the water crisis was stronger in the second half of 2021, when soybeans are already being harvested. For this product we only need rain in the first months of the year. So when we needed water, we had it”, he highlights.

The agricultural sector is responsible for 10% of all Brazilian jobs, according to the most updated data from the Brazilian Institute of Geography and Statistics (IBGE).

The service sector, another segment with an emphasis on 2022, represents approximately 70% of vacancies in the country. This activity is expected to grow by approximately 1.4% by the end of this year, and will also play an important role in the positive result of GDP.

Finally, the FGV survey shows that the IT sector, responsible for information security on the internet, had record growth during the pandemic, when remote work was adopted.

According to the survey, in the last 10 years, the segment had a 140% increase in sales. And the forecast is that the sector will continue to grow.

“This IT segment proved to be immune to any adversity and, during the pandemic, it benefited a lot, as the home-office grew a lot and people needed more help with technological issues. As soon as social interaction is reduced, people start using technology more”, concluded FGV professor Silvia Matos.