COVID-19 and the Recession Risk

BRAZIL ECONOMICS - Report 16 Mar 2020 by Affonso Pastore, Cristina Pinotti and Marcelo Gazzano

Just a week ago we released a Quarterly Outlook in which we projected Brazil’s GDP would grow by 1.5% in 2020. Since then, our understanding of the gravity of the problem caused by propagation of the new coronavirus strain has changed drastically, decreasing the growth probability and increasing recession probability. Against this backdrop of uncertainties, which are affecting the economies of Brazil and virtually all the rest the world’s countries, the establishment of lower interest rates can minimize the credit risk but cannot stimulate investments. In Brazil, monetary policy can only avoid a more intense deceleration (or recession), but it does not have the power to spur recovery. The need has also grown to maintain the course of the reforms that can at least guarantee staying under the spending cap, in a scenario of rising spending on the health system to avoid deaths and propagation of the virus. The government will have to reallocate resources and not abandon the commitment to fiscal consolidation, without which the power of actions by the Central Bank will fall drastically, deepening an already severe crisis.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.