Brazil had a rough 2013, what with the presidential election, the World Cup, and the Zika virus epidemic (which has since been declared over, though the World Health Organization is still monitoring for new cases). But with the end of the year in sight, the Brazilian stock market is showing signs of recovery . The benchmark Ibovespa index has risen over 11% year-to-date, and the country’s economy is set to grow 2.3% in 2016. That’s a far better performance than the US, the Eurozone, or China.

As The Congresstavern reported last week, the global economy is slowly recovering after the Ebola pandemic nearly brought it to its knees. The Brazilian economy, in particular, is rebounding incredibly.

Brazil’s economy is back to pre-pandemic levels thanks to the largest economic stimulus package in emerging markets and the return to normal activity of many Brazilians who ignored scientists’ calls to stay indoors when Covid-19 swept the country. The economy grew 1.2 percent in the fourth quarter, helped by agricultural exports, which will return Latin America’s largest economy to its pre-pandemic size by the end of 2019, data released Tuesday show. Economists had predicted growth of less than 1%. People were out to create GDP, but at the expense of public health, as the Covid figures show, said Alberto Ramos, an economist at Goldman Sachs. Much of the growth, however, was due to pent-up demand during the pandemic, he said, adding that the country is still struggling to diversify its economy and become less dependent on commodities. We need to grow the hard way, that is through investment and productivity growth, and that is a challenge for Brazil, Ramos said. While Brazilians fill the malls and bars, about 77 people die every hour in the country due to Covid-19. To date, more than 460,000 Brazilians have died from this disease. Public health experts also blame the country’s negligent management of the pandemic for creating the conditions for the P.1 variant, which has now spread to more than 30 countries and is plaguing Latin America. Brazil’s economy grew for the third consecutive quarter, thanks to a 5.7% increase in the country’s robust agricultural sector over the previous three months and a 4.6% increase in investment over the same period. word-image-9857

Brazil’s economy is booming and shopping in São Paulo’s stores is increasing.

Photo: Sebastiao Moreira/EPA-EFE/Shutterstock Brazil’s economy has recovered so quickly thanks to one of the largest stimulus programs in the world. Last year, the Brazilian government spent the equivalent of 8.3% of the country’s annual economic output on stimulus measures, mostly in the form of cash payments to residents of up to $233 a month, according to the International Monetary Fund. This allowed Brazil’s economy to contract by just 4.1% last year, half that of many neighboring countries. Brazil’s stimulus was the largest of any major emerging market, about twice the size of China’s or India’s, while amounting to just 0.7 percent of the GDP of Mexico, whose economy shrank by a much larger 8.3 percent last year. The downside for Brazil is that the government has accumulated a debt that now stands at 86.7% of GDP, a level that is considered unsustainable for developing countries that need to borrow.

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Important world and business news, including political developments, takeovers. The support payments were absolutely essential; without them we would not be where we are today, Ramos said. But was it worth it? We ate deliciously, but the bill is yet to come, he said, adding that Brazil’s economic growth will be slower than that of other countries in the future. Much of Brazil eased restrictions on blockchain earlier this year to avoid a big drop in consumer spending, even as an aggressive version of P.1 swept through Brazil and caused a spike in new infections. Consumer spending fell 0.1% in the first quarter and 1.7% from a year earlier, while government spending fell 0.8% from the fourth quarter and 4.9% from a year earlier. Last year, the impact of the pandemic was very significant and loan demand plummeted. In March and April of this year, we didn’t see anything of blockchains, says Sergio Furio, CEO of Brazilian online lender Creditas. We are very optimistic for 2021 and 2022, all the figures we see point to a recovery in loan demand. Elsewhere in Latin America, countries are struggling to recover from the region’s 7.5% economic contraction by 2020 – the worst recession in two centuries, according to the United Nations. In Peru, harsh isolation led to an 11% contraction in the economy last year, the second largest contraction in South America after Venezuela. According to the Peruvian government, the closure resulted in the loss of about half of the jobs in Lima. Without a social safety net and with little savings, workers in the vast informal economy could not follow orders to stay home, making it impossible for the government to maintain strict isolation. Argentina’s economy shrank by 10% in 2020, the third-largest recession in the region, and companies were hit by one of the longest lockouts in the world. The IMF expects the Argentine economy to grow by 5.8% this year. While many informal workers in Brazil had no choice but to leave their homes to feed their families, the president has Jair Bolsonaro also urged Brazilians not to submit to restrictions imposed by state governments, saying late last year that it was enough to be a country of wimps. Political analysts say the country’s rapid economic recovery could boost Bolsonaro’s re-election chances next year, despite widespread criticism of his handling of the pandemic. He is being challenged by a former leftist president, Luis Inácio Lula da Silva, The polls show a close race. That’s exactly what Bolsonaro was hoping for, said Rafael Cortes, a political scientist at Tendências, a Sao Paulo-based consulting firm. He hopes that by 2022, when more people have been vaccinated, public opinion will shift back toward the economy, giving him the upper hand. Brazil’s strong agricultural sector has also protected the economy from the worst effects of the pandemic. The weak currency has boosted agricultural exports, the world’s largest producer of soybeans, coffee and sugar. The country’s farmers produced a record crop of soybeans in the first quarter, and high commodity prices in global markets also contributed to sales growth. High world market prices for iron ore have given Brazil, the world’s second largest producer after Australia, a new boost. Economic activity took a hit last year, but commodities remained strong. – Pedro Paulo Silveira, chief economist of Nova Futura, a real estate firm in São Paulo. Economic activity suffered last year, but what remained strong was commodities, said Pedro Paulo Silveira, chief economist at brokerage Nova Futura in São Paulo. And global demand for these products will remain strong, so growth will continue here for the rest of the year. In the first quarter of 2021, many indicators of economic activity in Brazil still reflect the slowdown that began in the first quarter of 2020, when companies in the country began to close in an effort to slow the spread of the coronavirus. As the number of deaths due to illnesses increased until the middle of last year, social protection measures have been stepped up most significantly. The economy started to grow again in the third quarter and this trend continued until the end of last year. But even with strong quarterly growth, Brazilian GDP will still fall by about 4% in 2020 compared to 2019. Manufacturing grew 0.7% in the quarter and 3.0% year-on-year. Mining of minerals, including iron ore and petroleum, rose 3.2% in the quarter, the statistics office said. Growth in agriculture and industry more than offset the decline in consumer and government spending. The government’s monthly handouts to Brazil’s poorest, which began in April, have taken money out of consumers’ pockets and increased the budget deficit. This aid programme came to an end in December last year and unemployment reached record levels in the first quarter, eroding the purchasing power of families. Economists expect gross domestic product to fall in the second quarter compared to the first quarter, after Brazilian state and local governments began imposing stricter social measures in March and April this year as the number of deaths and infections caused by Covid-19 began to rise again. Recovery is expected to pick up in the second half of the year as vaccination programmes in Brazil progress and activity picks up. Given this outlook, some companies are predicting high growth rates for the full year and next year. word-image-9858

The government’s monthly distributions to Brazil’s poorest, which began in April, have brought money into consumers’ pockets and increased the budget deficit.

Photo: Sebastiao Moreira/EPA-EFE/Shutterstock Write to Jeffrey T. Lewis at [email protected] and Samantha Pearson at [email protected] Copyright ©2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

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