BRAZILIAN MACROECONOMIC OVERVIEW – JULY 2021 EDITION

Pandemic eases but stronger economic recovery remains challenging

For some time now, we have emphasized the importance of getting the pandemic under control so that the economy can recover from the huge shock brought about by COVID-19. In this sense, the pandemic’s second wave poured cold water on the relative optimism that emerged at the turn of the year, to some degree reflected in the good GDP result in the first quarter of 2021.

Now, in the middle of the year, a new cycle of moderate optimism is beginning, tempered by doubts about the extent of ongoing recovery and the speed with which pre-pandemic bottlenecks will return. Naturally, there are also concerns about new risks that are emerging, from a resurgence of the pandemic to the impacts of the normalization of monetary policy in rich countries, especially in the United States.

The last few weeks have confirmed a more benign picture of the coronavirus pandemic in Brazil. The daily numbers of new cases and deaths continue to fall. The seven-day moving averages of these two indicators have declined to 41,000 and 1,200 per day, respectively, according to data from Worldometer. A month ago, these figures were 72,000 and 2,000, respectively. At the same time, the pace of vaccination has intensified to over 1 million doses per day on average. Available vaccine inventories remain at high levels and vaccine deliveries are expected to increase in the third quarter. Recently, the Butantan Institute and Oswaldo Cruz Foundation received enough active pharmaceutical ingredients to produce 20 million and 10 million doses, respectively.

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