In the Economic Outlook Letter, released today in Rio de Janeiro, economists from the Research Institute Economic Applied Economics (Ipea) outlined three scenarios for the Gross Domestic Product (GDP), which is the sum of all goods and services produced in the country.
The tables consider the period of social isolation imposed by the new coronavirus pandemic and also the effectiveness of the mitigating economic policies adopted in Brazil.
As the world is going through, with the new coronavirus crisis, Ipea was unable to make a specific projection as it always did regarding the country's economic situation.
In any of the scenarios outlined, however, there will be a drop in GDP this year. “In addition to the internal impacts of practically stopping some sectors, you already have a worsening of the global economy as a whole.
IPEA
Although we have a very strong impact on the economy worldwide, this also has an impact on the Brazilian economy, and recovery always takes some time. We are working towards a quick recovery, but even so, there is a loss in services that are no longer being provided, and this is a loss that cannot be recovered.
So, it already generates a loss of GDP”, commented the director of Ipea, in an interview with Agência Brasil.
Partial recovery José Ronaldo Souza Júnior highlighted that in the three scenarios of GDP contraction in 2020, a partial recovery of the economy is considered in the third quarter, and continued in the fourth quarter.
“This is counting on an economic recovery in which economic policies to mitigate economic damage are successful in terms of employment, mass layoffs, etc.”, he stressed.
Therefore, the fall in GDP in the second quarter is already compromised due to partially or totally paralyzed sectors, said the director of Ipea.
Minimize impacts
Although he considered it inevitable that there will be some increase in layoffs, he hopes that economic measures can minimize this impact. “But it is obvious that there must be some increase in unemployment, because there are sectors that are completely at a standstill and some adjustment ends up being necessary.”
He noted, however, that in order to obtain financing with a government subsidy, the company must commit to not laying anyone off. “This helps minimize the impact.”
The director of Ipea admitted that the institute is navigating uncharted territory, because what we are seeing is a global standstill never seen before.
“Not even in times of war do we have news like this in the modern world. It really is something new; we have difficulty making predictions.”
In this case, he says he hopes that a treatment for COVID-19 can be found as soon as possible. Because this would lead to a return to normality as quickly as possible. “Let's say that the most positive scenario would be this.”
Restrictions
The discovery of a more efficient treatment for the disease would eliminate restrictions on all social interaction and allow people to return to a more... quicker life. “It is a question that depends more on medical studies than on economic ones,” Souza Júnior observed.