BRAZILIAN MACROECONOMIC OVERVIEW – OCTOBER 2021 EDITION

Services recover, commerce and industry slow down and inflation offers on respite

In Brazil, as in the rest of the world in general, as the last quarter of 2021 begins, the economy is reaping the benefits from the COVID-19 pandemic being gradually brought under control, in terms of the pace of economic activity and job creation. On the other hand, there is growing concern about high inflation, which has been more persistent than many stakeholders, including the main central banks, expected until a few months ago. It seems highly likely that the shocks generated by the pandemic will continue to challenge the public authorities, althou- gh the nature of these challenges will probably change a lot going forward.

Progress in controlling the pandemic has been remarkable and Brazil is one of the best examples of this. Thus, everything indicates that we are reopening the economy in a safe way, with well-contained risks of new waves of contamination due to the strong pace of vaccination. As of October 18, half the entire population had received two doses, and booster shots are also being made available at an accelerated pace. The seven-day moving average of new cases is around 10,000 per day, while the seven-day moving average of deaths is around 320, according to Worldometer – a relatively low level, similar to that observed in November 2020.

As a result, in Brazil, as expected, the normalization of the economy is moving forward, albeit highly une- venly across sectors. As the reopening process and urban mobility advance, the sectors that were hardest hit by the pandemic are growing. In particular, services provided to families have shown good results in recent months and all the signs indicate that this process will continue, judging by the results of FGV IBRE’s surveys. At the same time, however, retail and industry are presenting negative results and expectations for both sec- tors are not favorable.

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Any opinions expressed by Fundação Getulio Vargas’s staff members, duly identified as such, in articles and interviews published in any media, merely represent the opinions of these individuals and do not necessarily represent the institutional viewpoints or opinions of FGV. FGV Directive No. 19 / 2018.