The increase in new cases of covid-19 on Europe affects the performance of the stock exchanges, jeopardizes the recovery of the world economy next year and could harm the Brazil. According to economists heard by the Estadão, the perspective is that the countries where this increase is more worrying, as France, Spain e United Kingdom, extend to next year part of the losses they recorded this year and have a weak first quarter.
With the second wave of coronaviruses on the continent, Europeans have again adopted tougher isolation measures. On Wednesday, the Italy recorded the highest daily number of new cases, 7,332. On the same day, the French president, Emmanuel Macron, announced that nine regions, including Paris, will have a curfew until December. The Portuguese declared a state of calamity to contain the contagion.
In assessing the Bank of America (BofA), it is not yet possible to quantify the loss that European countries with more new cases should have, but indicators such as the Purchase Managers Index (PMI), the purchasing managers’ index, which reflects the performance of the industry and services, lights up yellow. In September, the service indicator was below 50 points in France, Italy and Spain, signaling a contraction.
In a recent report, BofA said it was concerned about the rapid increase in the number of cases. “With new restrictions announced every day, we remain concerned about the outlook for European consumers as we move into the fourth quarter. Service PMIs are in contraction, with countries reporting the sharpest drops from July levels, with those reporting the highest virus counts: France and Spain. ”
Welber Barral, former foreign trade secretary, recalls that European economies were already coming from a year of low growth and that any new closure of countries is worrying. “The increase in cases or the delay in the vaccine interfere with the markets and weaken these countries.” Yesterday, the main European stock exchanges closed with a drop of around 2%.
A second wave of covid-19 in European countries, such as France, Portugal, Spain, England, for example, may affect the growth of the Brazilian economy next year. In the accounts of economist Fabio Silveira, partner at MacroSector consulting, the impact of the second wave, if confirmed, may take at least a percentage point of GDP growth in 2021. “The growth that would be 2.5%, may fall to 1.5%, 1%”, .
If there is a slump in the European economy, Brazil will be affected, as it has an expressive trade with Europe and the United States. In this case, the American and Chinese economy will also feel the effects of the slowdown in activity in Europe. “With that, the Gross Domestic Product (GDP) world will be revised downwards, as everything is connected. ”
Lívio Ribeiro, senior researcher in the field of Applied Economics at the Brazilian Institute of Economics, gives Getulio Vargas Foundation (Ibre / FGV), agrees that a possible slowdown in Europe should affect the Brazilian economy. He only points out that it is not yet possible to calculate this impact. “The effect will be much more through expectations”, says the economist.
These expectations, according to Ribeiro, should be manifested both by the fear that a second wave will also occur in Brazil and through financial flows. “The global risk increases and the emerging ones, like Brazil, will end up suffering more.” In his opinion, if the discussion of greater risk aversion worsens, there may be an effect on the growth of 2021 in the country.
I o chief economist of MB Associados, Sergio Vale, ponders that the Brazilian economy is relatively closed. Therefore, Europe’s impact should not be significant. He says that the risk factors that can frustrate a growth of 2.2% of GDP for 2021 are domestic, such as the conduct of reforms and the fiscal deficit.