Brazil recorded a 9.4 percent GDP slump in the second quarter, media reports said. The results are the worst in the last three months due to the Covid-19 outbreak in the country.
Brazil’s MB Associados, told the media, “Emergency aid measures helped avoid a deeper reduction in consumer spending, particularly at the end of the quarter. Strong commodity-based sectors like agriculture and mining performed relatively well. However, the deterioration in the public accounts and its political impact are starting to hurt local markets again.”
It is reported that economic activities resumed in the country after the government relaxed lockdown. The government has launched fiscal spending to deal with the aftermath of COVID-19 but it could prove fatal later. More than 3.6 million cases of the virus have been registered in the country since the outbreak.
The country’s GDP slumped 9.4% in April-June in quarter-on-quarter terms following a 1.5% drop in the first quarter. The report has been produced by a Reuters poll. Economists are concerned about the heavy budget deficit as they have earlier predicted that the pandemic will lead to health crisis in Brazil.
Apart from higher public expenditure in the second quarter, analysts were expecting to see a boost from Brazil’s trade driven by large currency depreciation due to the pandemic.
However, sectors such as agriculture and mining in the country performed well during the pandemic. Local markets are impacted again due to the downfall of public accounts. It will be interesting to see how Brazil performs in the remaining months of the year.