Coronavirus Pains of Samba Nation
Brazil’s economy set to dive as it reports second highest COVID19 cases
BThe author is an assistant research fellow with the Institute of Latin American Studies, Chinese Academy of Social Sciences razilian President Jair Bolsonaro announced on July 7 that he tested positive for the novel coronavirus disease ( COVID- 19). The 65- year- old is considered to be in the high-risk age group for the virus, which had infected more than 1.71 million people and led to a death toll of nearly 68,000 in Brazil as of July 8.
The first COVID-19 case was confirmed in Brazil on February 26. It has since become the country with the second largest number of confirmed cases and fatalities in the world, after the U.S.
Despite the government’s emergency response, a number of factors have complicated the situation. Consequently, the Brazilian economy looks set to suffer with the forecasts looking bleak.
Factors at play
When the first case was confirmed, epidemic control was enhanced at airports and ports and the public was called on to follow experts’ advice on prevention. In March, stricter measures were implemented to deal with the rapidly expanding epidemic, including increasing the number of people being tested, shutting down schools temporarily and suspending public activities. On March 20, a state of emergency was declared. To help the vulnerable, the Senate approved a bill to grant an emergency salary of 600 Brazilian real ($120) to informal workers, the disabled and part-time workers. In April, some cities began to be put under lockdown as medical resources became strained and the infection rate soared.
Brazil also worked together with other countries on epidemic control. For instance, it held a foreign ministers’ video conference with the U.S., Australia, the Republic of Korea, India and Israel on the situation in June. It signed an agreement with a Chinese company to test the company’s potential COVID-19 vaccine in Brazil.
However, many adverse factors are aggravating the epidemic. As in other Latin American countries, the public health and medical infrastructure in Brazil lags far behind compared to that in Western developed countries. To compound Brazil’s woes, it was hit by a dengue epidemic in 2019, which had already burdened its medical health system. Lack of medical equipment and shortage of supplies and medical staff affect Brazil’s response to the epidemic.
Besides, Brazil is known for its favelas, shantytowns, that are home to 11 million people—2 percent of the population—and scenes of frequent street battles between armed gangs and police. In megacity Rio de Janeiro, at least 1.5 million of the overall 6.7 million residents live in nearly 1,000 favelas. These favelas are vulnerable to the coronavirus due to the congested living space and poor sanitary conditions, which make physical distancing impossible and potable water and private toilets a mirage. Moreover, the poor are unable to follow the stay-at-home order as they need to make a living by working outside.
The dissension between the central and local governments and among different government organizations also affects the continuity and stability of policies fighting the epidemic. Health Minister Luiz Henrique Mandetta was fired in April for criticizing President Bolsonaro’s response to the epidemic and his successor, Nelson Teich, handed in his resignation in May, after less than a month on the job.
How to balance epidemic containment
and the resumption of economic activities is another challenge facing the government. With the Bolsonaro administration making the economy the priority, many cities started to reopen, and supermarkets, shops and malls resumed operation. According to the Brazilian mall industry group Abrasce on June 18, 434 malls, accounting for 75 percent of the national total, reopened. However, the situation deteriorated in Brasilia, São Paulo and Rio de Janeiro after restrictions were lifted while the epidemic was not effectively contained.
Data from the Belo Horizonte Municipal Government in the southeastern Minas Gerais State showed that the intensive care unit occupancy rate rose to 82 percent from 40 percent after commercial activities were reopened.
São Paulo made wearing masks in public mandatory on July 1, as a measure to curb the fast-growing number of COVID-19 cases. The largest Brazilian business hub has seen approximately a quarter of the country’s total number of COVID-19 infections and deaths.
Economic outlook
Since Bolsonaro took power on January 1, 2019, a series of measures were introduced to improve the economy, including pension and tax reform, accelerating the opening up and privatization process and improving the business climate.
Thanks to such reforms, the Brazilian economy picked up some momentum and recovered growth from recession. In 2019, the GDP grew 1.1 percent, and the International Monetary Fund estimated that it would rise by 2.2 percent in 2020 at the beginning of the year.
However, the momentum was halted by the raging COVID-19. In the first quarter, the GDP shrank by 1.5 percent compared to the previous quarter, hitting the lowest level since the second quarter of 2015. The economy is set to nosedive further as the virus continues to spread.
Brazil’s Economy Ministry has forecast a 4.7-percent contraction in the GDP for the year, while private financial analysts have forecast a 6.51-percent drop. The Organisation for Economic Co-operation and Development has put the dip at 7.4 percent, saying it could recede even by 9.1 percent should a second outbreak hit the country.
As a member of the BRICS bloc, which also encompasses Russia, India, China and South Africa, and as a major Latin American country, Brazil’s eclipsed economy will have a negative impact on regional economic growth and the overall performance of emerging countries.