Brazilian Macroeconomic Overview – June edition

Brazilian Macroeconomic Overview – June edition


Resumption of activities amid uncertainty In the last month, the pandemic has begun to show signs of being controlled in developed countries, with the exception of some U.S. states. In developed countries, governments have moved forward with the process of reopening the economy, while maintaining preventive measures to reduce the risk of new waves of infection.

At the same time, the strong monetary and fiscal stimulus initiated in March has helped to avoid a deeper and more prolonged recession. After a sharp decline in activity in March and an even sharper one in April, the preliminary data for May indicates that developed economies are starting to recover. The worst may be behind us. Even if new waves of contamination occur, they are unlikely to lead to the comprehensive suspension of activities.

But will the global recovery be V-shaped? Probably not. On both the supply side and demand side, the most likely scenario is a stronger but partial recovery in the third quarter, followed by more moderate expansion in the following quarters. Global GDP is only expected to return to the level of late 2019 in mid-2022.

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