Government Estimates R$20 Billion Loss in GDP for Every Week of Isolation

RIO DE JANEIRO, BRAZIL – For each week of social isolation due to the novel coronavirus, the country’s GDP (Gross Domestic Product) should record an immediate loss of R$20 (US$3,4) billion, points out a study released on Wednesday, May 13th, by the Ministry of Economy.

A technical note produced by the portfolio’s Economic Policy Secretariat also states that an extension of the restrictions period leads to an increase in costs. This is because the longer the isolation period, the greater the number of bankruptcies and dismissals.

According to the Secretariat, the costs of the crisis are such that even a prompt economic rebound after the pandemic would not be enough to prevent a downturn in the economy in 2020.

“Such a projection was made on the assumption that social distancing policies will remain in place until the end of May. Should they be extended, the direct and indirect economic impacts would be amplified”, states the document.

The portfolio considers the production shutdown and the sharpest drop in GDP as a direct impact. The indirect results are the higher number of companies filing for bankruptcy, higher public and private indebtedness and, the increase in the unemployment rate.

According to the Secretariat, these factors generate a cyclical result, because the indirect impacts ultimately lead to a slower rebound and a sharper drop in long-term GDP.

Source: Folhapress

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