A survey carried out with large companies in the transport sector showed that there is optimism of recovery, however, there are still many fiscal challenges to be overcome

Economic indicators, especially in the transport sector, suggest that Brazil is leaving the worst phase of the COVID-19 outbreak behind, but will have to deal with fiscal challenges. 

For the first time in three months, job losses in the transport sector, heavily impacted by social distancing measures, have not increased. Some companies even cut fewer jobs, according to a research presented on Monday (14) by the National Transport Confederation (CNT).

The survey found that 35,9% of respondents expect a recovery in revenues in 2021. 

"The results of this survey show that transport companies are committed to the resumption of economic activity in the country, even indicating an eventual recovery of part of the jobs lost during the pandemic", said the president of the CNT, Vander Costa, during the presentation of the study.

Costa highlighted the importance of extending the tax exemption payroll. 

Of the companies consulted by the CNT, 67,4% said they had suffered losses during the pandemic. Meanwhile, 52,5% of respondents believe it will be at least a year before pre-pandemic demand returns, while 8,5% said their company would never see pre-pandemic revenue levels again.

Economics 

the index IBC-Br Central bank inflation, considered a proxy for the broader gross domestic product, rose 2,15% in July from June, marking the third consecutive monthly increase, according to data published on Monday. 

The economy appears to have suffered less than others overall, but fiscal risks have increased. 

“Brazil's superior performance so far can be attributed, in large measure, to quick and decisive policy responses, which helped to mitigate the impact of social distancing measures on household spending (retail sales returned to pre-coronavirus levels already in June), but due to government fiscal restrictions they cannot be sustained much longer,” said Banco Mizuho’s chief strategist for Latin America, Luciano Rostagno, in a research note.

“It means that the economic recovery ongoing process will inevitably slow down in the coming quarters and Brazil will still have to deal with its fiscal problems”, he added.