RIO DE JANEIRO, BRAZIL – Brazil should register in 2021 the 14th highest unemployment rate globally, after being in 22nd place in 2020 in the world ranking of countries with the worst levels of unemployment. This is what the risk rating agency Austin Rating points out, based on the new International Monetary Fund (IMF) projections for the global economy.
The ranking with data since 2016 compares the official indexes of the countries and the IMF projections for 2021 for a set of 100 economies. In 2019, Brazil ranked 15th. In 2016, it was in 27th place.
According to the survey, the unemployment rate in Brazil should rise to 14.5% this year, surpassing that of countries like Colombia, Peru, and Serbia, and going against the global average rate, whose estimate is to retreat to 8.7% this year, compared to 9.3% last year.
According to IMF projections, South Africa will continue to have the worst rate in the world (29.7%), followed by Sudan (28.4%) and by the West Bank and Gaza Strip (25.1%). The country with the lowest unemployment is expected to be Thailand (1.5%).
What explains the rise in unemployment in Brazil?
Among the main factors that explain the projection of worsening unemployment in Brazil in 2021 are the worsening of the coronavirus pandemic and the increased concerns about the health of public accounts, and the 2021 Budget, which has raised uncertainties about the pace of economic recovery after the historic 4.1% drop in GDP (Gross Domestic Product) last year.
In addition to the slow pace of Covid vaccination in Brazil, the growth forecast for the Brazilian GDP this year is lower than that estimated for emerging economies (6.7%). Other countries are also severely affected by the pandemic as Mexico (5%).
The IMF projects a 3.7% growth for the Brazilian economy in 2021, below the global average (6%). The current projection of the financial market economists is for a 3.17% increase in the GDP this year, according to the latest Focus survey from the Central Bank.
Even with the positive numbers of formal employment recovery in recent months, economists believe that a more consistent improvement in the labor market will only be seen in the second half of the year, conditioned upon vaccination progress and the reduction of economic uncertainties.
It is worth remembering that the IBGE considers unemployed only those who have actually looked for a job in the 30 days before the survey. In this sense, as the pace of economic activity improves, especially in the services sector – still severely affected by restrictive measures to contain the coronavirus’s spread – the tendency is that a larger contingent of people will start looking for work.
According to the IBGE, Brazil currently has 5.9 million unemployed people – Brazilians who can work but have temporarily given up looking for a job.
Prolonged economic crisis contributes to high unemployment
Brazil was already at an extremely high unemployment rate even before the pandemic’s arrival, well above the Latin American average. In 2019, Brazil ranked 15th among the worst countries in unemployment, with a rate of 11.9% – the worst in the region, behind only Costa Rica (12.4%).
The Ibre/FGV research study recalls that the pandemic’s economic crisis hit Brazil even before the country had recovered from the losses of the previous recession of the years 2015-2016.
Austin Rating’s survey shows that, unlike Brazil, other countries strongly affected by the pandemic in 2020 should already show a drop in the unemployment rate in 2021, as is the case of Colombia (from 16.1% in 2020 to 12.8% in 2021), Peru (13.6% to 9.7%) and Mexico (4.4% to 3.6%).
Source: G1