Around the world lockdown measures have been put in place to flatten the COVID-19 contagion curve and alleviate impact on health systems. The side effect, however, has been a profound and unprecedented negative impact in the real economy.
The solutions adopted by governments and central banks in the last global economic crisis will not necessarily be fit for today’s scenario; given its different nature and transmission channels. Brazil, for example, in response to the 2008 crisis incentivized demand (e.g., by cutting sales tax), which is not applicable in a situation where the population has limited ability to consume.
In a research report, Guy Carpenter-affiliate Oliver Wyman offers its perspective on the short- and potential medium-term effects of COVID-19 on Brazil – stock markets fell approximately 40 percent in only four weeks; local supply chains are likely to be impacted not only by Brazil-enacted containment measures but also by the cascade effect of measures adopted by key global trade partners, such as China and the United States.
Finally, Oliver Wyman also reviews and outlines the main types of strategic and tactical responses adopted by companies in Brazil and provide perspectives on the fiscal and monetary measures put in place by the Brazilian government.