Brazil economy faces headwinds after worst plunge in decades

RIO DE JANEIRO (AP) — RIO DE JANEIRO — Brazil dodged the most dire economic forecasts in 2020, but official figures released Wednesday show the COVID-19 pandemic still battered the nation and it continues to dim the outlook for recovery.

Brazil’s gross domestic product contracted 4.1% in 2020, the biggest annual recession since the series began in 1996, according to Brazil’s official statistics institute, known as IBGE. Still, the result is better the 5.3% plunge forecast by the International Monetary Fund in April last year

Since the beginning of the health crisis, Brazil’s President Jair Bolsonaro has been adamant that the economy must keep running, arguing that lockdowns and restrictions would inflict greater hardship on the population than the disease. That position, which flew in the face of public health experts’ recommendations, helped stave off an even deeper recession, at least in the short term — as did a generous pandemic welfare program.

But the country is once again recording more than 1,000 daily deaths from COVID-19, which could cause further economic slowdown.

“The worsening COVID-19 outbreak is casting a dark cloud over the outlook for the next few months at least,” William Jackson, an economist at Capital Economics, wrote in a report published Wednesday. Jackson pointed to a plunge in retail sales and likelihood of tighter measures to limit the virus’ spread.

The number of new COVID-19 cases in Brazil is still surging, with a new record high 1,641 deaths reported on Tuesday. The state-run Fiocruz Institute said Tuesday that intensive-care unit occupation rates in 18 states and the Federal District had surpassed 80% – a level considered critical.

As a result, many state governors, scientists and health experts have begun pushing...