Even before reaching the Stock Exchange, the economic impact of the Coronavirus pandemic primarily and decisively impacted companies that had to halt their activities in the face of social isolation measures imposed by the quarantine, preventing millions of people from working. Consequently, almost immediately, thousands of companies saw their revenues plummet or, in many cases, drop to zero. With businesses closing their doors in compliance with municipal and state government decrees, an instant slowdown in retail economic activity set in. With less money circulating, the economic engine lost momentum.
One of the many things that the COVID-19 pandemic disrupted, in addition to public policies related to health issues and financial factors, were economic dogmas—such as the concept of liberalism—along with the reform agenda in the National Congress and the role of the State in the face of an acute, unprecedented crisis in Brazil's history, which was unexpected and had, a priori, unpredictable solutions.
However, by the time the global crisis reached Brazil, it had already impacted other countries, drawing the attention of economists around the world, such as the internationally renowned researcher Monica de Bolle. Monica warned on her social media about the severity of what was coming to the country, as she was experiencing the crisis in the United States, where she lives and works.
As a geographically vast country with overwhelming social inequality—a factor that substantially worsens the crisis—the economist recommended, through posts on her social media and articles in national magazines, that Brazil begin to consider and adopt, with a sense of urgency, social protection measures, such as the guarantee of an emergency basic income, which was subsequently proposed by the government and approved by Congress.
The columnist for Estadão and Revista Época, who is also a researcher and professor holding a Ph.D. in economics with experience at the International Monetary Fund (IMF), highlighted in her interview on the Roda Viva program on April 20 “the need to increase government spending to bail out workers and businesses”. Among other factors emphasized by the economist on the program, social isolation is considered essential at this time to prevent a collapse of Brazil's healthcare system coupled with social chaos, which would directly lead to near-economic bankruptcy. In this scenario, recovery would occur more slowly, and there would be a risk of recession in the near future.
Economists specializing in crisis management assert that it is impossible to decouple the dialogue between economics and healthcare to ensure that the previously described scenario does not materialize.
Stock Exchange
When the credibility of a company is shaken—whether public or private—its stock tends to fall. Under normal circumstances, it is possible to navigate this and forecast a recovery; however, in the current situation, the environment remains unpredictable. Consequently, the pandemic has impacted corporate stocks and left investors in the dark, often unsure of how and when a recovery will effectively occur. Yet, what this represents for the national and international economy, and furthermore, how stock market fluctuations influence the political-economic landscape, is perhaps the major concern haunting entrepreneurs and investors facing the threat of an economic collapse.
Analysts and specialists assess that any prediction regarding the impact of the Coronavirus on the Stock Exchange right now is “pure futurism”—that is, lacking a scientific basis. In general, the economic impact includes the daily fluctuations occurring in the stock market and the fact that it is inseparable from the influences and unpredictability of the health scenario surrounding the pandemic, combined with the influence of the political volatility that Brazil has been experiencing alongside the pandemic.
Despite the previously mentioned “futurism,” agencies and institutions are pursuing actionable measures, grounded in science, to combat the health crisis and establish initiatives that ensure—even if gradually—the return of economic activity so that the “engine keeps running.” An example of this is the videoconference held by the IMF on April 21 to specifically discuss what can be effectively adopted in the global economy to address the impacts of the Coronavirus.
To determine how to proceed at this time, it is essential to stay vigilant and well-informed through official sources, intertwining healthcare and economic data.
