Porto Alegre, August 5, 2020 – A scary week in terms of global and Brazilian economic data. The effects of the pandemic and the interruptions in economic activities now appear in the form of figures for the first half of 2020. Historical lows in the U.S. and Chinese GDPs, a huge deficit in Brazilian public accounts, and rising unemployment. Nothing that had not already been announced and predicted by markets. In normal times, stock exchanges could have collapsed and accentuated global chaos.
However, it was not the picture of a week taking into account the release of indicators. Exchanges felt the impact a little but that was far from causing a global financial panic. High liquidity and interest rates close to zero continue to ensure that the data are negative, but the outlook for the medium term remains positive. Several new vaccines have been released to combat the pandemic from the end of the year, which maintains this optimistic stance in markets. In parallel to this, the U.S. elections, the environment in relation to China, economic solutions to public deficits in the post-pandemic, recovery of employment, are indicators to be evaluated within the political and economic conjuncture.
Meanwhile, agricultural commodities are trying some kind of price recovery taking advantage of the strong devaluation of the dollar in July in the international environment. In turn, the Brazilian domestic market is posting surprising highs in the middle of the harvest of the second crop. Capitalized producers and in no hurry to sell additional volumes of corn, an optimistic bullish outlook, domestic consumers concerned with raising stocks in the face of the good pace of shipments, and exporters trying to guarantee future shipments, but having to raise premiums to enable business. Undoubtedly, a beginning of the 20/21 season already differentiated from the normal price curve.
The economic data for July are important because they reflect last semester and the balance of companies in the international environment. This year’s estimates pointed to recession and sharp lows in the GDP for the main economies as an inevitable consequence of the pandemic and the almost general paralysis of regional economic activity.