Will prices go up even further? Understand how the increase in Covid-19 cases in China impacts Brazil

THE increase in cases of covid-19 in China has been disturbing the global market. The slowdown in the Asian country tends to cause impacts around the world. Due to the breakdown of the global supply chain, there is an increase in concern that the new shutdown will cause inflationmainly.

Will prices go up even further?  Understand how the increase in Covid-19 cases in China impacts Brazil
Will prices go up even further? Understand how the increase in Covid-19 cases in China impacts Brazil (Image: Montage/FDR)

Currently, dozens of cities in China have adopted lockdown or partial isolation. This social isolation, to prevent the spread of the coronavirus, already affects hundreds of millions of inhabitants.

How social isolation in China should affect Brazil

the lChinese lockdown has a financial impact, especially on manufactured products imported by Brazil — as semiconductors. The shortage of supply of these items has been happening since 2020, in the face of the reflexes of the pandemic.

To InfoMoney, the chief economist of MB Associados, Sérgio Vale, considers that, due to the importance of the Asian country in the export of industrialized products, the impact should not be felt only in the automotive chain.

Among others items that should be affected in Brazil are rubber artifacts, home appliances, electronics and textiles.

In China, the big bottleneck has been the congestion of containers. These containers transport all manufactured goods originating from the foreign country.

At the other end, economist Roberto Dumas, a specialist in the Chinese economy, tells InfoMoney that social isolation will cause a drop in China’s growth.

As a result, it tends to be lower demand for oil and iron ore. This item is important in the list of exports from Brazil to China.

According to Sérgio Vale, Brazilian agribusiness commodities exported to the Asian country should be less affected. That’s because people will continue to eat, even in the face of the lockdown.

To establish the exchange rate in Brazil, both China and the United States are important, as informed by the economist. In the Chinese case, it is related to economic growth. In the North American case, with interest.

Due to the existing risks, the dollar below R$5 was never the scenario seen by the specialist. Regarding China, Sérgio Vale understands that it is less of a problem, as he believes in a brief economic recovery. However, interest rate hikes in the US are just beginning, he said.

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Silvio Souza

Silvio Suehiro Souza has a degree in Social Communication – Journalism from the University of Mogi das Cruzes (UMC). Since 2019 he has been writing the FDR portal, where he has accumulated experience and vast knowledge in the area related to economics, finance and investments. In addition, Silvio produces analyzes on financial products and services, always striving for impartiality and reliable information.

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