Brazil’s Economic Engine Stalls as Retail Sales Hit Record Slump

(Bloomberg) -- Brazil’s retail sales fell the most ever in April in the latest sign that the coronavirus pandemic is engulfing Latin America’s largest economy.

Sales plunged 16.8% from March, more than the median estimate for an 12.1% decline from analysts in a Bloomberg survey. It was the biggest monthly drop since the start of the series in 2001, the national statistics agency reported on Tuesday. From a year ago, retail sales tumbled by 16.8%.

The figures illustrate the devastation that the coronavirus outbreak is inflicting on consumption, which has historically been a key driver of Brazil’s economic growth. The retail sales dive also follows record plunges from industrial production to formal job creation. Put together, the central bank is seen cutting its interest rate to an all-time low at Wednesday’s policy meeting.

Sales at supermarkets including food and beverages dropped 11.8% in April after rising 14.2% the month prior, according to the statistics agency. Meanwhile, a broader measure of retail sales comprising products such as cars and car parts dove by 17.5% on the month.

In April, state governors around the country ordered the closing of establishments from large shopping malls to neighborhood bars and restaurants in efforts to slow the spread of the coronavirus. Those policies have been repeatedly criticized by President Jair Bolsonaro, who argues that they raise unemployment and cause more harm than good to the population.

Earlier this month, central bank Economic Policy Director Fabio Kanczuk said the country’s output gap has increased since May and that it could justify more monetary easing. Analysts surveyed by Bloomberg expect policy makers to cut the Selic by 75 basis points to 2.25% this week.

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