One Third of Brazil Companies Closed Amid Coronavirus Outbreak
One Third of Brazil Companies Closed Amid Coronavirus Outbreak
(Bloomberg) -- Roughly one third of Brazilian companies were closed either permanently or temporarily in June amid the coronavirus outbreak, according to a national statistics agency report on the pandemic’s impact on firms.
Over 70% of companies surveyed said the pandemic hurt their sales, while over 60% are finding it hard to make payments and roughly 44% delayed taxes. Of the surveyed companies, around 60% have maintained employee headcount, but a third of those who have fired workers ended up letting go almost half of staff.
Latin America’s largest economy is on the cusp of a historic recession following social isolation measures that shuttered businesses without containing one of the world’s worst virus outbreaks. The most significant plunge in activity was seen in April, although recent data from the central bank showed only a modest recovery in May. Meanwhile, Brazil’s confirmed number of virus cases is expected to surpass 2 million this week.
To stimulate the economy, the central bank has cut its interest rate to 2.25%, the lowest level on record, before warning in their communication that any other possible easing will be residual. Analysts surveyed weekly by the central bank see the gross domestic product contracting 6.1% this year, with a 3.5% increase in 2021.
The national statistics agency surveyed nearly 2,000 companies nationwide by phone June 15-30. The firms surveyed come from sectors including industry, construction and services. About half of the businesses are small, with no more than 49 workers, but 15% of the companies interviewed employ over 500 people.
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