March 13, 2020


1. During week of tension, stock market plummets and price of U.S. dollar soars

The Brazilian stock exchange followed the global sell-off since the coronavirus was officially declared a pandemic. By Thursday, the stock exchange was suspended four times to avoid further losses. The circuit breaker halts business for half an hour when drops reach 10%. Yesterday, Ibovespa plunged by 19.60%, however the situation improved after the Brazilian Central Bank intervened and after the liquidity of the North American financial market increased. The measures reduced losses to 14.78% at the end of the trading day. It was the worst loss since the 1998 Russian financial crisis. The Brazilian Stock Exchange has plummeted 39.3% since January. On Thursday, the price of the U.S. dollar soared and reached R$ 5.0290 – a 6.52% increase – before falling to R$ 4.7882 at the end of the day. This morning, the actions of a number of central banks around the world affected international markets. In Brazil, at around 10am, the dollar was quoted at R$ 4.6955 and the stock exchange was also reacting, with a 13.26% increase.

O Globo: Após dia de pânico, Bolsa volta a subir em São Paulo
Valor Econômico: Melhora global fez dólar recuar na manhã de hoje
Folha de S.Paulo: Acompanhe o mercado financeiro em tempo real
Valor Econômico: Coronavírus e petróleo aumentam risco de crise global

2. The administration reduces GDP growth projection to 2.1%

This week, the Economy Ministry adjusted its GDP growth projection down .3% to 2.1% due to the coronavirus pandemic. The new projection, however, did not take into consideration plunging oil prices and the successive drops in the stock market. During an interview, Economy Minister Paulo Guedes talked about the worst-case scenario for the country: “If the pandemic takes over Brazil and we do not pass reforms, the GDP could reach 1%.” The minister also said that current expectations are good within the administration. “We reaffirm that, when it comes to the economy, we have the serenity and the capacity to face any exacerbation of the crisis. This anxiety in the currency exchange market and stocks are all natural when it comes to a crisis. However, we are sure that it is the time to transform the crisis into reforms,” he said. The Fiscal Policy Subsecretary of the Economy Ministry, Marco Cavalcanti, said he believes the impact of the pandemic in Brazil will be temporary, citing this as the reason why the administration maintains a growth projection of 2.5% from 2021 to 2024. In the first quarter of 2020, the projection is 1.84% higher than the same period of 2019.

Valor Econômico: Projeção do PIB cai de 2,4% para 2,1%
Folha de S.Paulo: Ministro diz que em cenário pessimista PIB crescerá 1%
O Estado de S. Paulo: Brasil tem capacidade de decolar, afirma Guedes

3. Number of coronavirus cases increases, federal government to hire physicians

Brazil has 151 confirmed cases of coronavirus, according to data from each state. The federal government announced that it will hire 5,800 physicians to deal with the demand on the public health system. By April 7th, all newly hired doctors should be working. In São Paulo, the state government said there are already cases of community spread in the state. Community spread is defined as cases in which people who have not come into contact with those with the disease and who have not travelled abroad being diagnosed. The most optimistic projection made by a technical board of the administration believes at least 460,000 people will be infected by the coronavirus over the next few months across the state. The most pessimistic projection raises the number to 4.6 million people – representing 10% of São Paulo’s population. Earlier this morning, the government of Minas Gerais placed the state on emergency alert and mandated that people who are suspected of having the disease undergo blood tests and exams.

Folha de S.Paulo: Veja em tempo real notícias sobre o coronavírus
O Estado de S. Paulo: No melhor cenário, doença pode atingir 460 mil só em SP
Ministério da Saúde: Acompanhe as informações do governo sobre a doença
O Globo: Acompanhe notícias sobre a pandemia de coronavírus

4. Press Secretary diagnosed with coronavirus

The Special Press Secretary of the Presidency, Fabio Wajngarten, has been diagnosed with coronavirus. He was among President Jair Bolsonaro’s entourage during an official visit to the U.S. and was close to both Bolsonaro and U.S. President Donald Trump. Due to the diagnosis, Bolsonaro and other members of his team are being monitored. Yesterday, during a live stream on social media, the president spoke alongside Health Minister Luiz Henrique Mandetta and a Brazilian sign language interpreter, all wearing surgical masks. Earlier today, Bolsonaro posted on Twitter that he had tested negative for coronavirus. As a precaution, the president cancelled a planned trip to Mossoró in Rio Grande do Norte on Thursday. Along with Bolsonaro and his family, politicians and other members of the administration who travelled to the U.S. have been tested for the virus.

O Estado de S. Paulo: Secretário da Presidência contrai coronavírus
Valor Econômico: Bolsonaro diz que teste para coronavírus deu negativo
Folha de S.Paulo: Veja em tempo real notícias sobre o coronavírus
Organização Mundial da Saúde: Acompanhe informações sobre a pandemia
Folha de S.Paulo: Com suspeita da doença, presidente cancela viagem

5. Schools close and services are under threat due to fear of contamination

Schools in some Brazilian cities have decided to suspend classes. The public education system in Brasilia did the same. Minister of Health Luiz Henrique Mandetta said he is considering bringing forward the school break. However, he assured that there are other important issues that need to be considered. “If the children are staying at home with their grandparents, the people who we need to protect the most – the elderly and people with chronic diseases – will be contaminated,” he said. Public universities such as USP and UNICAMP have announced that lectures are suspended. Private companies are also being affected with restrictions on the circulation of people, which will in turn affect the economy. “All people are talking about is the effect of the coronavirus abroad, but we could also be affected internally. In this case, the impact on the economy will be drastic,” says Armando Castelar, coordinator of Applied Economics at the Brazilian Institute of Economics of Fundação Getúlio Vargas. According to him, restricting the circulation of people would affect the leisure and tourism sectors. He added that if a quarantine is implemented, companies’ revenues would be affected even further – making it harder for people to pay loans and salaries.

Valor Econômico: Restrição à circulação pode afetar setor de serviços
Folha de S.Paulo: Acompanhe em tempo real notícias sobre o coronavírus