Worst. GDP. Ever. What does the future hold for Brazil?

We all knew it would happen, but now it’s official: Brazil is once again in recession. Just a handful of years after barely emerging from its longest economic slump on record, Latin America’s biggest economy finds itself back in the red once more, as a direct result of the coronavirus pandemic. The Brazilian Institute of Geography and Statistics (IBGE) announced GDP fell an eye-watering 9.7 percent in Q2 2020 — just above market expectations but still the worst quarterly result ever recorded.

Elsewhere, industry shrank 12.3 percent in the three months ending in June, followed by a 9.7 percent drop in the crucial services sector. Agriculture was the sole silver lining, rising 0.4 percent in comparison to Q1.

However, these disappointing results reflect the eye of the Covid-19 storm, from which economists consulted by The Brazilian Report believe the country is emerging.

“The result could actually have been much worse and the Brazilian economy is recovering faster than expected,” says Sergio Vale, chief economist at MB Associados. “That makes room for a lower-than-expected yearly drop.” Mr. Vale revised his yearly GDP predictions from a 6-percent contraction to 4.8 percent after today’s announcement.

Indeed, entering into recession had already been priced into the local market, and the benchmark stock...