Fitch Ratings has lowered Brazil’s economic outlook as industry figures slide. We explain the reasons for it: both from an economic and a political perspective.
Brazilian industry falls further than predicted
Though Brazil still lacks consolidated, recent data on economic indicators — which would give a clearer picture of the pandemic’s impact on the economy — all signs point to a serious deterioration of conditions in the coming months. In March, Brazilian industry suffered a 9.1-percent decline in output — the biggest slide since the May 2018 truckers’ strike. The drop is a direct result of the coronavirus crisis, as companies shut down factories, suffered from input shortages, and saw their clients disappear.
Why it matters. April’s industry figures should be much worse, with the entire month being spent under social isolation rules and rising Covid-19 figures. Bradesco predicts a 6-percent drop from March’s already low baseline.
Job market. Research from think tank Fundação Getulio Vargas states that revenues of 30 percent of all companies have already been significantly affected by the pandemic.
- Economists from Bradesco believe that average income will fall 25 percent among formal workers, and 50 percent among the informal job market. Some of those losses...