As the government delays, states jump into action in Covid-19 fight

. Apr 01, 2020
As the government delays, states jump into action in Covid-19 fight Gif: Salomé Gloanec/TBR

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We’re covering states’ efforts to help the economy during the Covid-19 crisis amid the government’s absence. The latest presidential speech. And the worst quarter for Brazil’s stock market ever.

What states are doing for the economy while the government stalls

Congress approved

a BRL 600 <a href="">emergency salary to informal workers</a> on Monday, but President Jair Bolsonaro has yet to sign it into law. On Tuesday, Economy Minister Paulo Guedes said there are many logistics involved in getting aid to people, and that &#8220;money doesn&#8217;t fall from the sky.&#8221; But the federal government has proven to be particularly slow to enact measures to reduce the blow of the inevitable recession. Asked about delays on behalf of the central government in Brasília, House Speaker Rodrigo Maia said the emergency salary &#8220;doesn&#8217;t seem too urgent for the government.&#8221;</p> <ul><li>Meanwhile, state administrations have passed several actions to compensate for the near-shutdown of the in-person economy. Moves range from distributing basic goods, offering aid and tax exemptions to companies, hiring health professionals and purchasing more supplies, or temporarily waiving utility bills.</li></ul> <div class="flourish-embed" data-src="story/240899" data-url=""><script src=""></script></div> <p><strong>Why it matters.</strong> Over 12 million people in Brazil are unemployed. Another 10 million have &#8220;individual low-income companies&#8221; and usually work under precarious conditions. And these figures are from <em>before</em> the Covid-19 pandemic.</p> <p><strong>No estimates.</strong> Economist Vilma da Conceição Pinto, of Fundação Getulio Vargas&#8217; Brazilian Institute of Economics (Ibre), mapped state actions up to March 25. She says it remains too early to tell how much money these moves represent.</p> <p><strong>Problems.</strong> The lack of coordination between the federal government and state administrations may let necessary actions go unaccounted for or cause an unwanted overlapping on certain issues.</p> <p><strong>Disparities.</strong> The economist also points out that states do not have the same needs. The emergency salary of BRL 600, for example, will be much more effective in poorer areas such as the North and the Northeast. However, low-income families in the richer South and Southeast, for example, might need additional aid.</p> <hr class="wp-block-separator"/> <h2>Covid-19 drags Brazil&#8217;s stock market to its worst quarter on record&nbsp;</h2> <p>Brazil&#8217;s benchmark stock index Ibovespa opened the year at 118,000 points, with most analysts predicting it to surpass 130,000 by year-end. But the first quarter of 2020 ended up being the worst three-month stretch in the history of the São Paulo stock exchange. Per a report by consultancy Economática, Brazilian listed companies lost a combined BRL 1.56 trillion (USD 299.7 billion) in market cap over the period — two-thirds of the losses came in March, when Covid-19 began spreading across Brazil.</p> <p><strong>Currency.</strong> The Brazilian Real lost 28.98 percent against the U.S. Dollar in Q1 — the third biggest quarterly rise on record — a rout pushed by lowering commodity prices. On March 31, the rate closed at USD 1 : BRL 5.1987.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/1759381" data-url=""><script src=""></script></div> <p><strong>Why it matters.</strong> Such losses may affect the real economy by <a href="">lowering confidence levels</a> and halting investments, as investors&#8217; profit expectations sour. The Brazilian Real&#8217;s devaluation also spells trouble for importers and companies with debts in foreign currency.</p> <p><strong>Fast and furious.</strong> The crash has not only been one of the deepest in history, but also the fastest. As we <a href="">reported on March 30</a>, economic outlooks changed so abruptly that people had no time to adjust their portfolios, causing massive losses for investment funds.</p> <p><strong>Perspectives.</strong> As with the overall economy, outlooks for the stock market are worsening. Brokerage firm XP slashed its Ibovespa forecast from 150,000 points to 132,000 … and finally to 94,000 points by year-end. JPMorgan is even more pessimistic: the bank sees Ibovespa closing out 2020 at 80,500 points.</p> <p><em>— with Natália Scalzaretto</em></p> <hr class="wp-block-separator"/> <h2>Bolsonaro (almost) changes his tune</h2> <p>In his sixth televised speech since early in March, President Jair Bolsonaro adopted a less confrontational tone to talk about the Covid-19 crisis on Tuesday night. Still, some traits remained: he still argued that the economy must be saved, even if that costs lives, and used false or misleading statements to make his point. At one point, Mr. Bolsonaro talked about a pact between the federal government and local administrations but offered no concrete proposals.</p> <p><strong>Why it matters.</strong> The speech was typical of Jair Bolsonaro&#8217;s behavior in the Presidency. After raising tensions to their maximum —&nbsp;to the point where <a href="">impeachment talks were being held</a> last week, as Brasília correspondent Brenno Grillo reported — the president tried to smother the discord and gesture to the political establishment.</p> <ul><li>It remains to be seen if the move will continue to be effective, or if it has grown old among political stakeholders.</li></ul> <p><strong>Protests.</strong> Once again, the president&#8217;s speech was muffled by the sound of people banging pots and pans from their windows and balconies in protest. In many regions, readers reported hearing them more intense than in previous days.</p> <ul><li>While an indicator of growing frustration in big urban centers that overwhelmingly supported the president, these protests can&#8217;t be taken as a clear picture of the overall electorate. At least for now, opinion polls have not shown a significant dent in Mr. Bolsonaro&#8217;s approval ratings —&nbsp;even if Brazilians overwhelmingly disapprove of his handling of the coronavirus.</li></ul> <p><strong>WHO.</strong> Mr. Bolsonaro said Tedros Adhanom Ghebreyesus, the secretary-general of the World Health Organization, shared his views that informal workers must continue with their activities or risk having no income. Dr. Tedros, however, said isolation measures should be enforced —&nbsp;and that governments are responsible for compensating them while the crisis lasts.</p> <figure class="wp-block-embed-twitter wp-block-embed is-type-rich is-provider-twitter"><div class="wp-block-embed__wrapper"> <blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">People without regular incomes or any financial cushion deserve social policies that ensure dignity and enable them to comply with <a href=";ref_src=twsrc%5Etfw">#COVID19</a> public health measures advised by national health authorities and <a href="">@WHO</a>. <a href=";ref_src=twsrc%5Etfw">#coronavirus</a></p>&mdash; Tedros Adhanom Ghebreyesus (@DrTedros) <a href="">March 31, 2020</a></blockquote><script async src="" charset="utf-8"></script> </div></figure> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Covid-19 numbers.</strong> The Covid-19 death toll in Brazil has risen by 42 on Tuesday, now reaching 201. The country also had its biggest daily increase in confirmed cases, with an extra 1,138 infections since the Health Ministry’s last update on Monday&nbsp;—&nbsp;to a total of 5,717 infections. This increase is more than double the previous one-day record, which stood at 502 cases.</li><li><strong>Trump.</strong> During a <a href="">press briefing</a> on Tuesday, U.S. President Donald Trump said he is &#8220;absolutely looking at a ban&#8221; on travelers from Brazil during the Covid-19 crisis. For weeks, President Jair Bolsonaro has modeled his approach to the outbreak after Mr. Trump&#8217;s —&nbsp;after both initially dismissed the severity of the coronavirus. But while the American leader has backpedaled and now pushed for isolation measures, the Brazilian president continues to oppose circulation restrictions.</li><li><strong>Inflation.</strong> With thousands of families emptying supermarket shelves in fear of shortages, food prices have gone up in Brazil during the Covid-19 crisis. According to a Fundação Getulio Vargas survey, inflation on basic food items in March reached 1.64 percent (against 0.19 percent between January and February). While the country braces for a sharp rise in unemployment, supermarkets in São Paulo&#8217;s metropolitan area are about to <a href="">hire 5,000 temporary workers</a>. Shares of Carrefour Brazil have been one of the few bright spots in the Brazilian stock market, rising 4.3 percent in March.</li><li><strong>Energy.</strong> An association for big energy consumers in the country has asked the government for a 22-percent discount on power bills during the crisis. The group argues that the cuts would save many industries at a &#8220;very delicate time.&#8221; As we <a href="">reported last week</a>, energy consumption has steadily dropped in Brazil since state administrations started enforcing isolation measures to contain the spread of Covid-19.&nbsp;

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