Brazil: Business confidence plunges to historic low in April
Comprehensive data for April from the Getulio Vargas Foundation (FGV, Fundaçao Getúlio Vargas), confirmed business sentiment in Brazil’s industrial sector sank to a record low. The index fell to 58.2 in April (previously reported: 58.5), the lowest reading in the series’ over 19-year history and below March’s 97.5. Consequently, the index moved further below the 100-point threshold that separates pessimism for optimism.
The deterioration in business sentiment was widespread in April; with both the current and expectations sub-indices falling to historic lows, corroded by the Covid-19 pandemic. Industrial firms’ assessment of the outlook was severely downgraded, largely due to their gloomier outtake on production expectations in the next three months.
The alarming decline in business confidence in April suggests the coronavirus pandemic has already begun to choke off business activity and thus investment. Covid-19 is likely to keep sentiment in the industrial sector depressed in the months ahead.