Fundação Getulio Vargas’ Economic Uncertainty Indicator for Brazil (IIE-Br) fell 3.4 points in August 2020, to 160.3 points. However, even after declining for four months in a row, the indicator has only offset just over half of the rises seen in March and April.

“Uncertainty continues to fall, but at a slower pace as the months go by. As a result, IIE-Br is still more than 20 points above its record high before the COVID-19 pandemic, which was 136.8 points, in September 2015. This result reflects the still-problematic context of the pandemic, current clashes related to the public finances and doubts about the pace of recovery in economic activity. In August, for the first time since the beginning of the pandemic, the Expectations component, which has a 20% weighting, had the biggest influence on IIE-Br. Despite the favorable evolution in the month, this component remains above 200 points, reflecting the difficulty in forecasting the economy’s direction 12 months from now, mainly due to the still-unknown impacts on the economic recovery of the gradual withdrawal of fiscal stimulus,” says FGV IBRE economist Anna Carolina Gouveia.

Both components of the Uncertainty Indicator moved in the same direction in August. The Media component decreased 0.6 points, to 143.5 points, making a negative contribution of 0.5 points to the fall in the overall index in the month.The Expectations component also made a negative contribution to IIE-Br, of 2.9 points, by decreasing 13.3 points, to 202.6 points. Despite this marginal drop, this indicator has so far only reversed 24% of the increases recorded between March and May.

The complete study is available here.