BRASILIA, March 25 (Xinhua) — The Central Bank of Brazil lowered the official forecast for gross domestic product (GDP) expansion in 2021 from 3.8 to 3.6 percent, according to a report released on Thursday.
“In terms of trajectory, the GDP projection will have a moderate setback throughout the first half of the year, followed by a significant recovery in the last two quarters of the year, as a result of the expected reduction in the COVID-19 death rate and in hospitalizations with the advancement of vaccination,” the Quarterly Inflation Report said.
For this, the Central Bank recommended the maintenance of the tax regime and a new round of emergency social aid, totaling about 44 billion reals (about 7.78 billion U.S. dollars), with payments concentrated in the second quarter of the year.
Among the factors for the reduced projection, the Central Bank cited the “increased uncertainty about the pace of economic growth, especially in the first and second quarters of the year,” due to a rise in COVID-19 cases and new restrictive measures.
On the other hand, the Central Bank said a possible economic downturn will tend to be less extensive than in 2020, and will probably be followed by a rapid recovery, especially in the second half of the year, as the effects of vaccination are felt more broadly.
In 2020, Brazil’s GDP closed the year with a 4.1 percent drop due to the effects of the pandemic.
The Central Bank also anticipated that mass vaccination will significantly reduce the number of severe COVID-19 cases, thereby easing pressure on the hospital system and allowing the economy to reopen more quickly. Enditem