The coronavirus outbreak leads to more pessimism around Brazil’s 2020 growth. How the outbreak can disrupt the Latin American economy. The Bolsonaro-Congress budget dispute settled—almost.
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Economists jump the gun, slashing forecasts before official GDP data
This morning, Brazil’s official statistics agency will publish the country’s official GDP data for 2019. Before the results are even released, however, pessimism toward Brazil spread through markets. Goldman Sachs drastically cut its Brazilian 2020 growth forecast from 2.2 to 1.5 percent. But the bank is actually more optimistic than consultancy firm Capital Economics—which predicts a paltry 1.3-percent growth for this year.
Why it matters. The world is still trying to assess just how bad the coronavirus epidemic will affect the global economy—and uncertain scenarios are particularly challenging for emerging economies.
In Fed we trust? The U.S. Federal Reserve slashed interest rates by 0.5 percentage points (to 1-1.25 percent). This was the first unscheduled emergency cut since 2008—and the biggest move since then. Stocks initially rebounded after the move, but the curve went back down as analysts fear that the Fed might actually be getting ahead of a coronavirus-related recession.
Brazilian stocks followed the trends...