Services activity in Brazil rose 5% in June from the previous month, a clear indication that Latin America’s biggest economy is recovering after suffering steep declines following the outbreak of the COVID-19 pandemic.
However, the sector is still far away from reaching the pre-crisis levels, according to the data released by the country’s statistics agency IBGE. The services activity fell 8.3 % in the first six months of the year compared to the same period last year.
Analysts say this is good news for Brazil, pointing to the fact that the services sector accounts for 70% of the country’s GDP.
The financial sector is by far the most important of the services industry in Brazil, with travel and tourism considered as the second most essential components of the sector. Considering the report, activity in the transportation and information & communications (ICT) industries grew more than expected.
Despite a steep rise in the number of COVID-19 cases, stock investors have remained bullish. Brazil’s benchmark stock index has risen more than 30% over the past three months.
Brazil’s economy is forecasted to contract 6.4% this year. Nevertheless, Brazil looks to be in a better position than Mexico and Argentina, which are predicted to shrink by 9.8% and 12.5%, respectively.
The recovery rate may pick up steam in the months to come if the number of COVID-19 cases decrease, say analysts.