WASHINGTON – Brazil’s economy is projected to shrink by 5.8% in 2020, the International Monetary Fund (IMF) said today, revising a more pessimistic forecast of a 9.1% contraction made mid-year.
“The economy is projected to shrink by 5.8% in 2020, followed by a partial recovery to 2.8% in 2021,” IMF said in its annual report on Latin America’s largest economy.
In the report released, IMF praised the right-wing government of President Jair Bolsonaro for its response to the economic crisis prompted by the coronavirus.
“The strong policy response averted a deeper economic downturn, stabilised financial markets, and cushioned the effects of the pandemic on the poor and vulnerable.”
However, given a sharp rise in primary fiscal deficit, gross public debt is projected to jump to around 100% of GDP in 2020, IMF said, remaining high over the medium term.
“Risks are exceptionally high and multifaceted,” IMF said, “including a second wave of the pandemic, long-term scarring from a protracted recession, and vulnerability to confidence shocks given Brazil’s high level of public debt”.
Brazil has the world’s second highest number of deaths from Covid-19 after the United States, with more than 145,000 fatalities from the disease.
Almost 12 million jobs were lost due to the crisis between February and July, of which over seven million were in the informal sector, and the unemployment rate rose to 13.8%. – AFP, October 6, 2020
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