The delay in vaccination against COVID-19 will be costly to Brazil; at least BRL 150 billion to the country’s Gross Domestic Product (GDP) in 2021. According to a survey by the consultancy LCA published by the newspaper O Estado de S.Paulo, if the country managed to vaccinate 70% of its population by August, the economy could grow 5, 5% this year thanks to the return of economic activities affected by measures of social distance.
But if the immunization campaign reaches this coverage only in December (most likely scenario), GDP will grow between 3% and 3.5% – which means handling less BRL 150 billion.
If this estimate is realized, Brazil will have a GDP 1% lower than the GDP of 2019, before the pandemic. But there are even more pessimistic projections, such as Tendencia Consultoria, which estimates a GDP of only 2.9%. To the O Estado de S. Paulo, the consultancy’s chief economist Alessandra Ribeiro attributed caution to the pandemic scenario and the country’s fiscal situation.
Poverty rate increases because of COVID-19 and end of emergency aid
Another effect of the COVID-19 pandemic is more brutal. According to a projection by FGV Social released by Folha de S.Paulo, Brazil started 2021 with an extreme poverty rate higher than that registered ten years ago, in 2011. Currently, 27 million Brazilians live on less than BRL 246 per month.
According to the report, this increase in the poverty rate is related to the end of the emergency aid paid by the Federal Government to 55 million Brazilians. The aid even helped to reduce the rate of extreme poverty last year. The benefit paid to the poorest can be resumed, but it depends on negotiations between the Federal Government and Congress.