Market improves 2020 GDP projection to -5.66 percent

Market improves Brazil 2020 GDP projection to -5.66 percent

According to the latest report from the Central Bank, Brazil’s economy seems to slowly be recovering from the adverse effects caused by the Covid-19 pandemic, with GDP projections improving to an expected market contraction of 5.66 percent in 2020.

This assessment marks the fifth week in a row of improved GDP forecasts by the Central Bank, which projected a GDP drop as low as 6.5 percent in mid-June, as previously covered by The Brazilian Report. Last week, the Central Bank tipped Brazilian GDP to fall 5.77 percent by the end of the year.

Inflation projections for 2020 also improved slightly, going from a 1.67 percent increase last week to 1.63 percent.  

For 2021, the Central Bank continues to forecast a modest 3.5 percent growth based on post-pandemic figures in 2020. The Brazilian Real is still expected to end the year undervalued in relation to the dollar with a projected exchange rate of BRL 5.20 to USD 1. In comparison, 2019 saw the Real finish the year at BRL 4 : USD 1.

The slightly improved GDP projections come as state and city governments push to restart the economy across the country, despite continuously high daily tallies for new Covid-19 cases and deaths.

The return to action seems to be aiding Brazil’s struggling economy. Yet, a resurgence in Covid-19 cases resulting in a second wave of coronavirus cases could be even more devastating for Brazilian businesses.

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