Brazil’s uneven performance will be split into two halves in 2021 as challenges mount in the first half of the year, while a more sustainable economic recovery is expected to begin later as mass COVID-19 vaccination evolves more profusely. 

FrontierView’s most recent Brazil Market Review explores several drivers of the country’s uneven performance path to recovery in 2021: 

  • Vaccination trends and timelines for sustainable economic reopening 
  • Private sector dynamics as it fills the void left by the public sector amid lingering fiscal crisis risks 
  • Changes to the political landscape as President Luiz Inácio Lula da Silva re-enters the political arena 

Alarming levels of COVID-19 cases, stricter social distancing measures, and reduced fiscal stimulus will contribute to an initial economic slowdown 

Although Brazil suffered the mildest contraction among major Latin American countries in 2020, it is now facing significant economic headwinds as COVID-19 cases and healthcare systems reach capacity, forcing stricter social distancing. Meanwhile, fiscal stimulus is significantly narrowing amid lingering fiscal crisis risks, which will slow internal demand.  

Brazil’s COVID-19 vaccination rollout is off to a modest start, delaying the beginning of successful economic reopening  

Brazil’s main vaccination bottleneck has been receiving contracted doses, due to a lack of vaccine diversification and a heavy reliance on active pharmaceutical ingredient imports for local production. We expect Brazil to overcome these bottlenecks by the middle of 2021. As a result, firms should prepare for Brazil to return to quarterly growth starting in Q3. 

Firms should expect a K-shaped recovery in Brazil 

Strong customer segmentation will be essential for firms in 2021. The shifting dynamics of fiscal stimulus, COVID-19 cases and vaccinations, local social distancing measures, and varying industry and regional performance underscore this idea. Ensuring that local teams are tracking the right leading indicators for demand amid a volatile and still-uncertain economic scenario will be crucial. 

Read our latest Brazil Market Review to prepare your business to accelerate quickly later this year. 

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