September 13, 2020
1. Brazil could leave group of 10 largest economies in the world by next year
According to the International Monetary Fund (IMF), Brazil will no longer be among the 10 countries with the largest economies in the world as of next year. The country – which has been significantly affected by the devaluing of the Brazilian real in comparison to the U.S. dollar – will experience a projected 5.8% drop in GDP compared to 2019, falling three spots to the world’s 12th largest economy. According to a study by Fundação Getúlio Vargas (FGV), which monitored the IMF projections, Canada, South Korea and Russia will surpass Brazil.
In the evaluation by FGV researchers, the drop in ranking is mostly caused by exchange rate depreciation and not solely due to a reduction in economic activity. The average price of the U.S. dollar this year has hovered around R$ 5.28, a figure 30% higher than last year. As a result, the drop in the Brazilian GDP represents a fall from USD $1.8 trillion down to USD $1.4 trillion. In 2011, Brazil boasted the 7th largest world economy.
2. Economy minister says that without reforms, Brazil is at risk of hyperinflation
Economy Minister Paulo Guedes sent a “message” to the Congress, saying that the country could see the return of hyperinflation if a satisfactory solution to public debt is not found. According to Guedes, the solution could come in the form of approving political reforms and bills presented by his economy team this year. President Jair Bolsonaro ordered that negotiations on reforms only begin after the election, as Congress is still focused on municipal votes.
According to the minister, a privatization plan is also necessary. The plan has not advanced, but it could help reduce the country’s debt. “I am very frustrated with the fact that we have been here for two years and have not been able to sell a single state company,” he said. His aides have said that Guedes is not fearmongering, as his assessment is based on current estimates for economic recovery. In Brazil, hyperinflation is defined as being when the official index for inflation surpasses 50% in a month, which happened in 1980 and 1994. Last month, the Extended National Consumer Price Index (IPCA), the official inflation index, increased 0.86%.
O Estado de S. Paulo: Ministro alerta para risco de hiperinflação
O Estado de S. Paulo: Guedes tem razão sobre contas públicas deterioradas
3. Stock market registers a 13 year record-high in foreign investments
This week, the Brazilian stock market registered a record high amount of foreign investment. On Monday, there was a total of R$ 4.5 billion (USD $828.8 million) in foreign investments registered by the market. It was the first day after the announcement of Joe Biden’s victory in the United States presidential election and the largest amount for a single day since 2007. The amount was also above what had been registered in the entire month of October, when the country received R$ 2.9 billion (USD $529.6 million) in investments.
Specialists believe that the Democrat’s victory in the U.S. and the announcement of good results in coronavirus vaccine trails have boosted the market. Analysts believe that the foreign market will show a stronger recovery in investments over the next few months. However, they also warn Brazil that the country needs to show significant advances towards reforms, control the public debt and reduce expenditures to attract capital.
4. Chinese vaccine trials suspended, Bolsonaro celebrates but government backs down
Two days after suspending trials for the Chinese coronavirus vaccine, the government relented under pressure from politicians and public health experts. On Monday, when the suspension was announced, President Jair Bolsonaro celebrated this fact as a “personal victory.” The drug is being developed in partnership with São Paulo’s state government under Governor João Doria – a political adversary of Bolsonaro. The suspension of testing came following the death of a Brazilian volunteer who was taking the vaccine. It was subsequently established that there was no connection between the vaccine and the volunteer’s death.
The CoronaVac is close to completing its human testing phase. The government of São Paulo has planned for a large scale vaccination campaign in the next few months, all across the state. The Federal Supreme Court ordered the administration to explain its decision with the president criticizing the “exaggerated” fear caused by the pandemic. “It’s all about the pandemic now. I am sorry for the dead, but we are all going to die one day. There’s no escape. We have to stop being a country of sissies,” said Bolsonaro. Pfizer announced that their vaccine will arrive in Brazil by March. The country has experienced over 164,000 deaths from the virus and 5.7 million people have been contaminated.
O Estado de S. Paulo: Governo recua e libera testes de vacina chinesa
Folha de S.Paulo: Tem que deixar de ser um país de maricas, diz Bolsonaro
Valor Econômico: Pfizer diz que Brasil terá vacina até março
G1: Entenda a polêmica sobre os testes com a vacina
Globo: Acompanhe notícias sobre a pandemia
IRRD Covid-19: Veja o mapeamento de casos no Brasil e no mundo
5. Blackout delays municipal elections in the state capital of Amapá
A fire in the electrical distribution center in Amapá – which happened on November 3rd – led to the postponement of elections in the state capital, Macapá. By law the election must take place before December 27th. The electricity supply has still not returned to normal and the Superior Electoral Court made the decision to suspend the election for security reasons. Brazilians who are 16 years of age or older will choose new mayors and local representatives on Sunday.
Due to the coronavirus pandemic, the country’s municipal elections had already been postponed to November 15th, having originally been planned for October 4th. Nearly 500,000 people are running for office and in some locations with over 200,000 voters there could be second rounds of voting in mayoral races. This year, 147 million people will be eligible to vote. The electoral judicial authorities have implemented biosecurity measures to avoid coronavirus contamination, making the use of face coverings mandatory, as well as social distancing and use of hand sanitizer before and after using the electronic voting machines.