Economy Ministry sticks to 4.7-percent GDP fall estimate in 2020

The Economy Ministry maintained its estimate of a 4.7-percent plunge for Brazil’s GDP in 2020, followed by 3.2-percent growth in 2021. “It is important to highlight that the pandemic and social isolation measures have generated uncertainty regarding economic activity, imposing restrictions on the use of predictive methodologies purely based on historical patterns,” said the ministry in a bulletin.

April and May results suggest the lowest point of the crisis caused by the pandemic is behind us, said the team. “Many indexes from May and June show signs of economic recovery, that it is leaving the ‘bottom of the pit,’ getting ready to recover in the year’s second half.”

The agribusiness sector is expected to be an outlier, growing 3.8 percent in Q2, when compared to last year. On the flip side, industrial output should shrink by 14.5 percent.

Market’s estimates, however, are far more pessimistic than the Economy Ministry’s. Institutions polled by the Central Bank’s Focus Report have a median projection of a 6.1-percent plunge this year. It is also a stark contrast with international institutions. The OECD, for instance, expects a 7.4-percent drop in activity, that could be extended into a 9.1-percent plunge in case of a second wave of Covid-19.

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