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Brazil, one of two epicentres of COVID-19 scourge

Covid-19 cases in Brazil have ballooned beyond expectations. The Latin American country has been forced to employ stricter measures to contain the situation and bring its economy back to pre-pandemic times.

The situation in Brazil

Currently, Brazil has become the second nation to go beyond the 4,000 daily death tolls as a result of the COVID-19 virus. The country, as of March 2021 contends with over 7.9 million cases and over 200,000 deaths.

This shock comes after Jair Bolsonaro, the Brazilian president, refused to admit the seriousness of the venomous situation and showed averseness to imposing lockdown and social distancing orders.
“All of us are going to die one day,” he told reporters in Brasília. “There is no point running away from it, from reality. We have to stop being a country of sissies.”

Critics of Bolsonaro’s government believe that downplaying the health risk due to COVID-19 has accounted for the huge economic loss the country currently faces.

Consequently, the health system in several parts of Brazil has been overstretched and may be on the verge of an eventual collapse as daily deaths continue to trend northwards.

Earlier in the year, a total of about 2,000 deaths were recorded in 24 hours. By April, deaths have grown in excess of 4,000 persons per day.

“Healthcare facilities are overstretched and patients now occupy more than 90 percent of beds in intensive care units (ICUs) of most hospitals” a healthcare worker laments.

Also, medical services providers are disturbed about the fast shortage and the lack of availability of key medical supplies such as oxygen masks and sedatives due to the ongoing situation.

Nation-wide pandemic toll in the country has neared 370,000 by April 2021, the second-highest in the world after the United States. Total coronavirus cases in Brazil stand at 13,758,093, according to Worldmeter, an online data site.

Sao Paulo, Brazil’s most populous state with a total population of about 46 million people, has recorded deaths in excess of 1,400 persons in the latest count, local authorities admit.

However, they argue that reduced hospitalisation and deaths have been recorded since the one-week partial shutdown was ordered.

With the administration of vaccines now being rushed, less than 3 percent of Brazil’s 210 million people have been able to receive the shot, Our World in Data, an online data survey site reports.

How the pandemic has weighed on Brazil’s economy so far

No doubt, Brazilians are feeling the heat of the pandemic and it is not hard to tell so. For the most part of 2020 when the virus first struck, Brazil’s gross domestic product (GDP) growth trended southward.

Between 2020 and 2021, the emerging economy of Brazil has had a tough ride with the pandemic as public health and economic activities significantly plunged.

April 2021 growth expectations by experts show that GDP should expand by 3.17 percent during the year which is a 0.33 percentage drop from February’s forecast of 3.5 percent growth rate.

The last three months of 2020 seemed to have experienced a rebound (3.2 percent growth, quarter-on-quarter) as negative growth trends slowed down but still within the negative bound. This year’s forecast (around Q4 2020) tells a different story, as growth expectations suggest a positive and slightly increasing trend all through.

A robust fiscal support programme was launched in 2020 to ease the pressure on businesses and households, but this is not promised for 2021; government needs to fix its finances and lower its debt profile if it must experience post-pandemic prosperity in the coming months.

With a decline in government spending and rising new cases, economic prosperity in 2021 seems bleak, however. Government must, therefore, intensify efforts to balance economy-wide safety alongside recovery plans.

Monetary authorities in Brazil are also worried about inflationary outcomes. Since mid-2020, prices have been rising, headline and core inflation stood at 5.2 percent and 2.6 percent, respectively, in February.

The general upward trend in prices has been fuelled by increases in intermediate goods prices which led to increases in producer prices. Mid-2020, Brazil’s producer price inflation jumped to 23 percent.

Between April 2020 and March 2021, core inflation in the country has spiked, recording an all-time high within one year. The lowest rate was recorded in August 2020 (1.286%).

In March this year, the country’s central bank held up interest rates by 75 basis points to prevent a further rise in prices. More monetary tightening is expected, should inflation expectations are unrealised.

Currency weakness is another ill that has befallen Brazil’s emerging economy. By February and March 2020, the country’s currency has fallen by 15 percent against the US dollar. When compared to a year later, Brazil’s real (that local currency) still stands below the dollar by 22.9 percent.

With this currency position, Brazil fares worse among her counterparts in the emerging markets as India and Mexico enjoy a more stable position relative to the US dollar. Although, recent reports claim that India may have overtaken Brazil as the world’s coronavirus epicentre.

According to Getulio Vargas Foundation, consumer confidence in Brazil remains shaky. Fears of further spread and deaths from the noxious virus have weakened domestic demand and business operations, particularly in the food, hospitality and travel services sectors.

Containing the situation

Arguments about how soon the economy should reopen are still ongoing. While some religious centres were allowed to operate during the Easter festivities, local authorities still question the government’s position to retain freedom of open worship and trade amid safety concerns.

Also, some schools in Rio de Janeiro, Campinas and Sorocaba cities have been open despite warnings from critics on the health implication of this decision.

Much of Brazil’s economic rebound will depend on the government’s tactical effort to halt the viral spread of the disease by enforcing effective health-related practices and promoting timely and unhindered vaccination rollouts.

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