Brazilian govt admits possibility of recession due to COVID-19

RIO DE JANEIRO -- The Brazilian government on Friday updated estimates for the country's GDP growth in 2020 to 0.02 percent, only nine days after the projection was reduced from 2.4 percent to 2.1 percent, suggesting the possibility of economic recession.

The new estimates were motivated by concerns over the COVID-19 pandemic in Brazil. According to a latest report from the Health Ministry, there are 904 confirmed cases of COVID-19 in Brazil, including 11 deaths, compared to 98 cases with no deaths a week ago.

According to Adolfo Sachsida, economic policy secretary at the Ministry of Economy, the possibility of a technical recession, defined by two consecutive quarters of economic contraction, is already foreseen.

"There is a good chance we will not have favorable GDP figures in the first quarter, and have a significant reduction in the second quarter," he said.

Earlier on Friday, the Brazilian Senate approved a request by President Jair Bolsonaro to declare a state of emergency.

With the declaration, the Brazilian government will be allowed to increase public spending beyond the fiscal target set for this year, which is expected to cause a deficit of up to 124.1 billion reals (about $24.5 billion).

Without this measure, the government said that it would need to make significant curtailments.