Economy after coronavirus: What should happen in Brazil?

The pandemic caused by the new coronavirus caused a drastic transformation in the economic scenario.

We live in uncertain times with perspectives that change every week.

And without a forecast for resuming activities, the small entrepreneur is the one who has been hit the most.

After all, he does not have the same cash flow as a large company to maintain himself in a crisis of this proportion.

In addition, with a drop in the country’s productive capacity due to the closure of many companies, the unemployment rate has broken records compared to the last crisis.

Ultimately, data from the IMF (International Monetary Fund) point to a decrease in economic growth in Brazil of about 5% for 2020.

How much this scenario may or may not worsen will depend on the effectiveness of the emergency measures taken by the government to try to reduce future impacts in the country.

Continue reading and see what are the main projections for the economy after the pandemic in Brazil.

What to expect from economic growth?

The projection of GDP (Gross Domestic Product) for this year was 2.17%, however, this percentage was gradually falling in the weeks following the beginning of the coronavirus, reaching a 0.48% retraction for 2020.

However, the projected percentage for 2021 of 2.5% growth was maintained.
This is because, with the resumption of the circulation of goods and services, the trend is that the economic slowdown will start to reverse as of next year.

And how is inflation?

The first thing to understand is that Brazilian consumer behavior has changed and that this change directly impacts the country’s inflation rates.

It is the law of supply and demand: if there is demand, prices rise, but if demand falls, they decrease.

But why is this lower inflation not good?

Because a drop in consumption is indicative of a drop in consumer income, that is, there is no monetary circulation that moves and drives the country’s economy.

According to the Central Bank, inflation should still remain below the expected 4%, with a projection of 3% this year and an estimate of 3.60% for 2021.

Exchange rate: how is our currency?

During the month of March, the country watched the dollar exchange rate break records never seen before, and in April we were hit again by strong highs in the dollar and a major retraction in the stock exchange.

There is also a high impact with the decrease in foreign trade and the departure of foreign investors, which causes a shortage of the dollar in Brazil and, consequently, the devaluation of our currency: the Real.

Understand that the slowdown in economic growth has an impact on trade agreements with other countries, which causes currency circulation to decrease.

It is clear that the expectation of a future currency quote is not so precise, as this is an indicator that depends on many variables.

However, there is a tendency for the dollar to remain above R $ 5.00 until markets start to normalize.

The positive impact of e-commerce

Not everything had a negative impact and proof of this is the e-commerce sector, which has grown substantially.

Many companies have managed to keep adapting to internet sales, just as others have grown even in a crisis scenario.

The fact is that the pandemic ended up showing the importance of the digital presence and an opportunity to leverage business by meeting the needs of consumers in the midst of isolation.

Whether this scenario will continue?

This depends a lot on the strategies of the entrepreneurs.

The trend is that it is not just the need for consumption due to physical unavailability, but that the convenience of online purchase becomes a reality, even among those who still had some kind of prejudice against the digital medium.

For you to have an idea, the expectation of growth in the sector this year is 18%, which can still be surpassed.

The economy scenario after coronavirus will still be troubled.

But as every change is preceded by chaos, this is an opportunity to rethink business models and strategies that will contribute to a new moment and to economic growth in the country.