Fundação Getulio Vargas’ Economic Uncertainty Indicator for Brazil (IIE-Br) fell 9.9 points in July 2020, to 163.7 points. After the third consecutive decline, the indicator is still 27 points above the record prior to the COVID-19 pandemic, of 136.8 points, set in September 2015.

“The reduction in uncertainty in July reflects the environment of gradual economic reopening, adaptation by families and companies to present circumstances, and knowledge of measures taken by the government to mitigate the impacts of the health crisis. Despite this, the indicator is still at a very high level, halfway between February’s result and the peak in April, influenced by the volatile nature of the coronavirus pandemic. There is a great deal of concern about the possibility that a second wave could disrupt the ongoing recovery trend,” said FGV IBRE economist Anna Carolina Gouveia.

In July, both components of the Uncertainty Indicator moved in the same direction. The Media component fell 8.4 points, to 144.1 points, contributing 7.3 points to the drop in the overall rate in July. The Expectations component fell 12.1 points, to 215.9 points, after rising 112.8 points between March and May, contributing a 2.6-point reduction to IIE-Br.

“The expectations component is above 200 points for the fourth month in a row, showing how difficult it is at the moment to predict how the economy will perform on a 12-month horizon, as the critical phase of the pandemic will be followed by a reopening process in which fiscal stimuli are gradually removed,” Gouveia said.

The complete study is available here.