• The estimative considers the end of emergency aid and, above all, the “significant” increase in cases and deaths related to COVID-19 since November;
• The previous prognosis was a 2% drop.

JPMorgan downgraded its forecast for the performance of the Brazilian economy in the first quarter of 2020.

JPMorgan now estimates that the Gross Domestic Product (GDP) will retract 5% between January and March compared to the October to December interval, with seasonal adjustment. The previous prognosis was a 2% drop.

Even though the JPMorgan review reflects a statistical effect, the institution noted that it had already incorporated into the GDP accounts the end of emergency aid and, above all, the “significant” increase in cases and deaths related to COVID-19 since November.

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In a note, the consultancy stated that, although the industrial sector seems to remain solid in the short term, the continuous drop in consumer confidence reinforces the thesis of negative GDP growth in the first quarter.

While the estimate for the GDP of 2020 has been improved, that for 2021 has been maintained at an expansion of 2.6%, well below the rate of 3.5% in the most recent Focus survey by the Central Bank.

Translated by LABS.