Letter IEDI n. 1127—Insufficient reaction in 2021
In 2021, the industry did not grow enough to offset the 2020 losses. Strictly speaking, if it were not for the depressed bases of comparison, the sector would have had a much weaker performance since, month after month, discounting seasonal effects, industrial output had a year marked mostly by falls.
Of the twelve months of 2021, nine were negative and only three registered positive figures in the adjusted series. Dec'21 was one of these exceptional months, with a 2.9% increase in relation to Nov'21, the most intense of the year. Most industrial branches (77%) were able to advance at the end of the year, but the main contributions came from only two activities, vehicle production and the food sector.
Despite this recent reaction, the end of 2021 was clearly worse than the end of 2020. There was a decrease of 5% in Dec'21 compared to Dec'20 and of 5.8% in Q4'21 in relation to the same period of the previous year. In addition, industrial production remained below the level prior to the initial shock of the pandemic: -0.9% compared to Feb'20.
Among the four industrial macro-sectors, three started to grow again in 2021 as a whole, although only two of them fully offset the 2020 losses. The biggest obstacles appeared in consumer goods, showing the impact of high unemployment and the inflation-driven deterioration of the population's purchasing power on industrial recovery.
Semi-durable and non-durable consumer goods were the exception in 2021, registering a 0.5% fall in the year, after a 5.9% drop in 2020. Considering the final quarter of last year, when the sector contracted 8.1%, the situation continues to be adverse in 2022, despite the recent improvement in the food branch (+1.8% Dec'21 versus Dec'20).
Durable consumer goods, in turn, were the ones with the lowest expansion last year, only +1.9%, that is, very far from enough to offset the 19.8% drop of 2020. It is worth remembering that, by consuming a large number of parts and components (several of them imported), many of its branches are particularly affected by the bottlenecks in the chain of suppliers. The result for Q4'21 was also not promising: -22.3%.
Intermediate goods, despite falling 4.4% in the last quarter of the year, achieved a rate of growth of 3.3% in 2021 as a whole, overcoming the decline of 2020 (-1.0%). However, if we consider that in 2019 this macro-sector was already not doing well (-2.1%), the 2021 increase only managed to cancel the losses of the previous biennium.
Capital goods are where the resumption showed more consistency last year. Output advanced 28.3%, more than recomposing the 2020 decline (-9.6%) and this was the only macro-sector to remain positive in the last quarter (+6.4%). The source of this performance is the impulse coming from production of capital goods for agriculture, for construction and also for transport.
Production of capital goods for the industry itself, which had recovered in the second half of 2020 and in the first half of last year, shrank again in the 2nd half'21: -1.2% in the year-on-year comparison, due to the performance of Oct–Dec'21 (-8.9%).
Given the expectation of a virtually-flat Brazilian GDP in 2022 (+0.3% according to the Focus Bulletin and the IMF), the scenario for the industry this year is not the most favorable, starting with the new worldwide outbreak of COVID-19 due to the omicron variant, which should prolong the disorganization of supply chains on a global scale. According to the latest Focus Bulletin, the industry's GDP in 2022 is expected to fall 0.2%.
The effects of this are already seen in the confidence of entrepreneurs in the sector. The FGV indicator, in Jan'22, was below the 100-point mark for the first time since Aug'20, signaling a drop in confidence, and the CNI indicator maintained a downward course, being about 10% below the level seen in early 2021.