Brazil set for record GDP drop, says Itaú

gdp itau

Brazil’s largest private bank Itaú Unibanco forecasts a 6.5-percent skid for Brazilian GDP in 2020. If proven correct, it would be the biggest drop on record — even worse than the -4.35-percent growth rate of 1990 when Brazil faced hyperinflation.

Itaú chief economist Mario Mesquita said the best-case scenario would be a drop of 0.4 percent. This scenario depends on a possible relaxation of social isolation measures by April 14 — and a 100-percent growth rate during Q3 2020. However, the state of São Paulo (the country’s industrial heart) has extended quarantine rules until at least April 22.

The latest Focus Report (a survey of top-rated investment firms carried out by the Central Bank) shows a drop in the median GDP growth forecast from -0.48 to -1.18 percent.

Car production drops 21 percent in March

Brazil’s car production has dropped 21.1 percent in March 2020, when compared to the industry’s output one year ago. From February, there was a 7-percent slide — and the auto sector year-to-date performance is down 16 percent. According to sector representatives, a shortage of inputs from China — which kept most of its workers in industrial hub Wuhan at home for nearly two months — was already a threat to producers, but isolation measures that kept most workers off the production line were the main reason.