Brazil tries to cover up Covid-19 death count

. Jun 08, 2020
Brazil tries to cover up Covid-19 death count Photo: Lightspring/Shutterstock

This newsletter is for PREMIUM and STANDARD subscribers only. Become one now!

This week, we talk about the Brazilian government’s active attempts to cover up the Covid-19 problem. And the rollercoaster that has been the country’s foreign exchange rate.


To cure a fever, break the thermometer

Incapable of containing the spread of the coronavirus, Brazil’s government has instead engaged in hiding the numbers of the pandemic in the country.

Since last week, when the number of daily new deaths started breaking consecutive records —&nbsp;always in the four-digit territory —, the federal government began tampering with official data.</p> <ul><li>Earlier last week, the government began delaying its updates until after all nightly newscasts on national television had finished.</li><li>On Friday, the online dashboard containing the progress of Covid-19 cases and deaths went off the air. It returned almost a full day later — but included only daily cases and casualties, hiding the total tallies.</li><li>On Sunday, the government published not one, but two very different counts. At 8:40 pm, it published that 1,382 deaths had been recorded over the previous 24 hours. Then, at 9:50 pm, that figure was changed to just 525 deaths — a difference of 857.</li></ul> <p><strong>What could have happened.</strong> The government had previously announced that it would only declare the deaths that occurred on that very day — excluding deaths from previous days that had been confirmed at a later date. That could explain the discrepancy between 1,382 and 525.</p> <ul><li>Regardless of the reason, the government is creating an environment in which official data simply cannot be trusted —&nbsp;putting Brazil in a similar category as countries such as Venezuela.</li></ul> <p><strong>Why it matters.</strong> The government is trying to rewrite history as it happens. That much was admitted by billionaire Carlos Wizard, who was set to be named to a senior position in the Health Ministry —&nbsp;but resigned after receiving backlash for publicly acknowledging that the administration was going to &#8220;recount the dead.&#8221;</p> <ul><li>Besides masking the reality — and possibly creating a false sense of security that could lead people to expose themselves more — the lack of reliable data has an immense impact on scientific research, which is already suffering from budget cuts.</li></ul> <p><strong>Irony.</strong> President Jair Bolsonaro says his personal motto is a biblical passage from the gospel of John: &#8220;Ye shall know the truth, and the truth shall make you free.&#8221;</p> <p><strong>&#8220;Hidden&#8221; bodies.</strong> On Saturday, <strong>The Brazilian Report</strong> revealed that in cities where Covid-19 death rates are low, casualties caused by acute respiratory distress syndrome have skyrocketed — suggesting that many Covid-19 deaths are going by undiagnosed.</p> <p><strong>Reaction.</strong> Federal prosecutors started an investigation into the case, asking the ministry for information on why it has changed its data disclosure methods.</p> <div class="flourish-embed flourish-scatter" data-src="visualisation/2729834" data-url="https://flo.uri.sh/visualisation/2729834/embed"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <hr class="wp-block-separator"/> <h2>Understanding Brazil&#8217;s currency rollercoaster</h2> <p>On Friday, the Brazilian Real recovered some of its value against the U.S. Dollar, with the exchange rate falling below the USD 1 : BRL 5 mark for the first time since March 13. Despite still being the worst-performing currency in the world so far this year, the Brazilian Real has nevertheless rallied 16 percent since May 14, when it hit its lowest nominal level against the greenback.</p> <ul><li>The Brazilian Real has suffered from the country&#8217;s triple-headed crisis: political turmoil, looming recession, and the Covid-19 pandemic. In the meantime, the Central Bank has also slashed the benchmark interest rate to new all-time lows of 3 percent, which adds additional pressure to the currency.</li></ul> <div class="flourish-embed flourish-chart" data-src="visualisation/2760958" data-url="https://flo.uri.sh/visualisation/2760958/embed"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <p><strong>An unusual effect. </strong>As a general rule, a weaker currency means higher inflation, as industrial inputs become more expensive. But that hasn&#8217;t been the case in 2020, and Brazil is actually expecting <em>deflation</em> in May. This time around, companies are not being able to pass their enhanced costs on to the consumers, as the coronavirus pandemic has held back consumption.</p> <ul><li>&#8220;The link between the exchange rate and inflation has not changed. The problem now is that income has taken a nosedive, as has demand. We have pent-up inflation,&#8221; University of São Paulo economist Michael Viriato <a href="https://economia.uol.com.br/noticias/redacao/2020/05/13/dolar-alto-e-inflacao-quieta-e-novo-normal-por-enquanto-dizem-economistas.htm">told</a> UOL.</li></ul> <div class="flourish-embed flourish-chart" data-src="visualisation/2761205" data-url="https://flo.uri.sh/visualisation/2761205/embed"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <p><strong>Political factors. </strong>More than anything else, political developments will dictate the currency&#8217;s behavior in the near future. Internationally, the deteriorating relationship between the U.S. and China — Brazil&#8217;s main trading partners — is something worth monitoring. &#8220;However, the Brazilian currency is more susceptible to local political issues, especially those that could have severe implications on fiscal policies,&#8221; says economist Camila Abdelmalack.</p> <p><strong>Interest rates.</strong> Next week, the Central Bank is expected to slash benchmark interest rates to just 2.25 percent a year, as investors debate whether or not we have reached the point in which lowering these rates produces no stimulus effect in the economy.</p> <hr class="wp-block-separator"/> <h2>Markets</h2> <p>Covid-19 has imposed a challenging scenario for shopping malls. Still, there are some bright spots in the industry. Sector giant BR Malls has inked a partnership with e-commerce firm B2W for the online sale of products from 6,000 stores, using their brick-and-mortar stores for click-and-collect purchases. Moreover, BR Malls has already reopened 11 of its 32 malls across the country.</p> <p class="has-text-align-center"><em><strong>Natália Scalzaretto</strong></em></p> <hr class="wp-block-separator"/> <h2>Streaming v. pay-TV</h2> <p>The number of Latin American subscribers to streaming services is set to surpass those of pay-TV this year, for the first time ever. The region should end 2020 with 62.2 million subscribers to streaming video services, a 36-percent jump compared to last year’s figures. By 2024, this number will nearly double.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/2740181" data-url="https://flo.uri.sh/visualisation/2740181/embed"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <hr class="wp-block-separator"/> <h2>Looking ahead</h2> <ul><li><strong>Environment.</strong> After being chastised on the international stage for a spike in deforestation rates, the Brazilian government is set to present a plan to protect forest lands, which should involve actions to be taken between now and June 2023. The plan is being led by Vice President Hamilton Mourão — after Environment Minister Ricardo Salles was caught on tape saying the government should seize the &#8220;opportunity&#8221; given by the Covid-19 pandemic to “<a href="https://brazilian.report/environment/2020/05/28/environment-minister-really-running-cattle-herd-through-amazon/">run the cattle herd</a>” through the Amazon, “changing all of the rules and simplifying standards.”</li><li><strong>Inflation.</strong> On Wednesday, Brazil will know its official inflation rate for May. Analysts at Bradesco BBI bank expect a 0.45-percent deflation for the month —&nbsp;reflecting the drop in fuel and industrial goods prices, not to mention the slowdown of the services sector. A study by think tank Fundação Getulio Vargas believes the 2020 inflation rate could be the lowest since 1933 — when Brazil was feeling the effects of the Great Depression.</li><li><strong>Stocks.</strong> The Brazilian benchmark stock index Ibovespa reached almost 95,000 points on Friday, a level analysts were only expecting to be reached at the end of the year. The swift change in outlook comes after other world economies have improved their economic expectations, not to mention promising news around efforts to produce a Covid-19 vaccine. Will the V-shaped recovery last? Or is there a W-shaped scenario on the horizon?</li></ul> <hr class="wp-block-separator"/> <h2>In case you missed it</h2> <ul><li><strong>Protests.</strong> The fears that pro- and anti-Bolsonaro demonstrators could descend into violent clashes on the streets did not materialize this weekend&nbsp;—&nbsp;and rallies in 12 states happened in a largely peaceful way on Sunday. In São Paulo, the demonstration in favor of the president gathered around 100 people, dwarfed by the 3,000 protesters calling for his ousting. The opposition, however, remains divided — with many groups coming out <em>against</em> street protests due to the health risks that public gatherings entail.</li><li><strong>Politics.</strong> The Bolsonaro administration has struck up an alliance with the so-called &#8220;Big Center&#8221; — a group of faceless center-right parties with a large bench in Congress — in the hopes of barring a potential impeachment request against the president. On Friday, however, Prosecutor General Augusto Aras filed corruption charges against Congressman Arthur Lira, a prominent member of the Big Center. The indictment could rattle the relationship between President Jair Bolsonaro and his new allies, as Mr. Aras had been seen as being totally aligned with the president&#8217;s office.</li><li><strong>Industry. </strong>The Brazilian Institute of Geography and Statistics published its latest figures for industrial production in April, showing an 18.8-percent drop in output. While it is the worst result on record, the sector actually outperformed expectations, thanks to positive results from food processing firms (+3.3 percent) and pharmaceutical companies (+6.6 percent).</li><li><strong>Kickstart.</strong> The government announced that a new regulatory framework for sanitation services is its gamble to attract investments and stimulate the economy in the post-pandemic period. The Economy Ministry hopes that the bill — which has been in discussion since the Michel Temer administration (2016-2018) — will finally be put to a vote late in June. It could raise up to BRL 700 billion in new investments.

Our content is protected by copyright. Want to republish The Brazilian Report? Email us at contact@brazilian.report