Synthesis of the Brazilian Economy
With the death toll still stubbornly high – 1,800 per day in the 7-day moving average – the second wave of Covid-19 contagion is poised to become the start of a new epidemic cycle. The premature relaxation of the rules on opening in sectors where physical proximity is the norm and the still sluggish pace of vaccination together portend a new upsurge of contagion, likely causing new collapses of regional hospital services within a few weeks. The errors of evaluation and reaction of the government are being revealed, on live TV, by the sessions of the special congressional investigating committee (CPI) on Covid in the Senate, undermining the president’s popularity. Besides keeping him under pressure, it is possible that some of his former ministers and aides will suffer punishment, but impeachment is very unlikely because this is not in the interest of the main political actors, who are worried about consolidating their positions in the 2022 elections. The economy is being helped by the favorable external winds – rising commodity prices and extreme liquidity – and by the loosening of social distancing measures, although possibly precipitating a third wave of contagion. Nevertheless, this improvement is happening against a backdrop of rising inflation, not to mention the pell-mell response to the Covid-19 crisis. The upshot is exacerbation of the differences in performance of the various economic sectors and the burden imposed by the pandemic on citizens. It isn’t surprising, then, that the sectors and people on which the pandemic has treaded lightly, or that have benefited from it, are optimistic, while those that have suffered the brunt of the disease continue to be vulnerable and discouraged.
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