Brazil ends new 'lost decade' with GDP drop of 4.1% in 2020

It was the third-worst annual drop in the gross domestic product (GDP) on record for Brazil, after 1981 and 1990

Brazil's economy shrank 4.1 per cent in 2020, officials said Wednesday, closing out what analysts called another "lost decade" for Latin America's biggest economy with a year badly disrupted by the coronavirus pandemic.

The contraction, which was in line with analysts' forecasts, added to a bad run for a country that was just recovering from a devastating two-year recession in 2015 and 2016.

It was the third-worst annual drop in the gross domestic product (GDP) on record for Brazil, after 1981 (-4.25 per cent) and 1990 (-4.35 per cent).

Those two years bookended what economists call Brazil's "lost decade," when GDP grew just 1.66 per cent on average across 10 years.

With last year's contraction, Brazil's economy grew even less for the decade from 2011 to 2020: an average of 0.3 per cent.

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Brazil continued its modest rebound from recession in the fourth quarter of 2020, with a growth of 3.2 per cent, said the national statistics institute, IBGE.

That was not enough to erase what it called "the adverse effects of the Covid-19 pandemic" in the first half of the year, but it did mean Brazil fared slightly better than some other major economies.

However, economists have been revising down their 2021 growth forecasts for Brazil, in the face of a worsening wave of Covid-19.

Analysts polled by the central bank are currently predicting growth of 3.29 per cent this year.