COVID-19 disrupts Brazil’s economic rebound
Brazil saw an economic contraction in the three months to June following the coronavirus pandemic’s blow on demand, according to government statistics agency IBGE.
Brazil’s gross domestic product dropped 0.1%, missing economists’ median forecast growth of 0.2%. The figure was also a sharp decline from the first quarter’s 1.2% expansion.
COVID-19 restrictions in major cities in April and May made an impact on consumption and manufacturing, disrupting Brazil’s economic rebound.
However, a bigger slump was prevented due to stronger government expenditure and services activity that compensated a fall in fixed investments and weaker agricultural output during a poor coffee harvest.
The central bank was also forced to raise interest rates as inflation soared during the recovery, overshadowing the outlook for next year.
However, Economic Policy Secretary Adolfo Sachsida said the economy is still expected to expand more than 5% this year.