Atradius released a report this week analyzing the economic and political effects of the COVID-19 pandemic on Brazil.
Brazil’s less stringent containment measures and stronger fiscal support during COVID-19 have led to smaller output loss compared to most other countries in the region. In 2020, GDP is expected to contract by 4.6%. Business confidence has rebounded since June, however, the outlook for many industry sectors like oil and textiles remains poor to bleak.
Political stability has improved in recent months however, economic policymaking is hampered by a highly fragmented and polarized Congress. The administration under President Jair Bolsonaro pursues free-market and socially conservative reform policies, welcomed by the Brazilian business community. The outcome of the November 2020 municipal elections will provide a first indication of Bolsonaro’s chances for re-election, which could lead to political instability.
A rebound is expected in 2021, but downside risks remain. It is expected that the economy will rebound by about 4% in 2021, with private consumption and investments increasing 4.3% and 7% respectively. However, another long-lasting surge of the pandemic and an ongoing global economic slump pose a major downside risk for Brazil’s economic performance next year.
To access the full report, click here.
