Brazil GDP Drops 4.1% In 2020, COVID-19 Surge Erodes Rebound

• According to statistics agency IBGE, Brazil’s economy shrank by 4.1% last year due to the coronavirus pandemic, its worst drop in decades. The country is experiencing a devastating second wave of COVID-19 that threatens to cut short a stronger-than-expected rebound in the economy at the end of 2020.
• Latin America’s largest economy grew by 3.2% in the fourth quarter, more than the 2.8% median estimate in a Reuters poll of economists.
• However, that recovery, based on consumption by households receiving emergency government cash transfers, may be eroded by a resurgent outbreak now killing record numbers of Brazilians and adding to fears of another downturn early this year.
• The full-year 2020 drop was the worst since the current IBGE series began in 1996. The 2020 plunge was also the worst since a 4.35% fall in GDP recorded in 1990, according to central bank data going back to 1962, and the third-steepest in that series.

(Source: Reuters)