The American bank Morgan Stanley reduced its projection for the Ibovespa in 2020 after the stock market crash caused by the advance of the coronavirus. The bank now estimates that the index will end the year at 85,000 points. In January, the projection for the end of 2020 was 125,000 points. In its new base scenario, Morgan Stanley considers that the country will face a sharp but temporary economic slowdown and a rapid recovery, without any further fiscal corrosion.
According to the government, R$ 147.3 billion ($28 billion) will be used in emergency actions to help the most vulnerable sectors of the economy and groups of citizens, in addition to preventing high unemployment. Companies will be able to postpone, in three months, the payment of Simples Nacional and the deposit of the Guarantee Fund for Length of Service (FGTS). Contributions to Sistema S will be cut in half, and it will be easier to renegotiate credit and receive external inputs.
Affected by travel cancellations resulting from the coronavirus, the Brazilian airline industry will receive relief measures in the coming days, the special secretary for Productivity, Employment and Competitiveness of the Ministry of Economy, Carlos da Costa, said recently. According to Costa, meetings are still being held with various sectors to assess the impact of the Covid-19 pandemic on the economy.
The main index of the Brazilian stock exchange, B3, plummeted again on Monday (16) and came to have business stopped right at the opening, amid doubts in global markets about the efficiency of the measures announced by the Federal Reserve (FED) banks and fears about the scale of the impacts of the coronavirus pandemic on the economy. The Ibovespa closed with a drop of 13.92%, to 71,168 points. During the trading session on Monday, the index dropped more than 14%, to 70,854 points, the lowest of the session.
Profits from the tourism and transportation sector fell 77.2% in the city of São Paulo due to the advance of the new coronavirus, according to data from Cielo released on Monday (16). The result is nominal, without considering the inflation for the period and compares the periods from 9 to 15 March 2020 against the same period in 2019. In the total, retail decrease 13.9%, according to Cielo data. While tourism fell, the drugstore and pharmacy segments and the supermarket segment rose 30.2% and 19.2%, respectively.
Expecting the impact of the coronavirus on inflation, the Brazilian Central Bank’s Monetary Policy Committee (Copom) will hold, on Tuesday (17), the second meeting of the year to define the rate Selic, currently at 4.25% per year. The spread of the disease and the instability of the financial market in the last week have led to uncertainty about the fate of basic interest rates in the economy. At the beginning of last week, most of the financial institutions consulted by the Central Bank’s bulletin predicted the maintenance of the Selic, which is at the lowest level in history.
To try to contain the dollar’s boom, the Brazilian Central Bank already injected $ 15.245 billion in resources in the foreign exchange market in March. The dollar has been rising around the world amid investors’ search for protective assets. Finally, in Brazil, the turbulent political scenario around the tax budget has served as a stimulus for an even more expensive dollar.
American Airlines decided to suspend 75% of its international flights, including all routes to Brazil, for 51 days, counting from this Monday (16). The decision comes in response to the decreasing demand for flights and amid restrictive measures adopted by the American government due to the advancement of the coronavirus. The country closed its borders to European countries and recently declared a state of national emergency.
The Amazon Biotechnology Center (CBA) wants to enable the creation of a new industrial pole in the state of Amazonas. The idea is to bring together, in a structure similar to that of the Manaus Free Trade Zone, companies that add value to products that have, as raw material, the region’s biodiversity. The Amazon Biotechnology Center has, among its main objectives, to develop new technologies based on integrated research, which will be carried out directly and indirectly by a network of regional and national laboratories.
The government’s plan to tackle the effects of the global turmoil – caused by the coronavirus outbreak and exacerbated by tension in the oil market – includes accelerating the reform agenda, actions by the Central Bank to contain the dollar and run down the credit channel and the strengthening of public banks (Caixa and Banco do Brazil) in lines of assistance to companies. In a meeting with the economic team, Guedes made it clear that he has no “plan B” for the economy and that the strategy is to follow the initial plan already outlined and take advantage of the unfavourable international winds to “deepen it”.