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Coronavirus lockdowns shutter 522,700 Brazil businesses in two weeks

SAO PAULO (Reuters) - Lockdown measures to prevent the spread of the novel coronavirus led to the temporary or permanent closure of 522,700 Brazilian firms in the first two weeks of June alone, government statistics agency IBGE said on Thursday, adding that nearly all were small businesses.

The survey attributed 39.4% of all closures in the period to coronavirus measures, underscoring how badly the pandemic has hit businesses, especially those with up to 49 employees, which accounted for 99% of all closures.

Such small firms account for 30% of Brazil’s gross domestic product, underscoring how severe the business failures’ impact may be on Brazil’s economy, which is expected to shrink 6.4% this year, according to a Reuters poll published on Wednesday.

Besides lockdowns, small companies have found it difficult to borrow money to help weather forced lockdowns. A recent survey by small business industry group Sebrae found that some 86% of firms that sought loans had not received them, with 28% still awaiting an answer, as Reuters reported in June.

IBGE estimates that Brazil had around four million companies by the first half of June, of which 2.7 million were in full or partial operation, 610,000 were temporarily closed and 716,000 had closed permanently.

The survey also indicates that 34.6% of the companies reduced their workforce in early June compared to a comparable period in March, when the pandemic gained momentum in Brazil, while just 3.8% hired more employees.

Of the total number of companies operating in the period, 70% reported that the pandemic had a negative impact, 16.2% stated that the effect was small or nonexistent and 13.6% said that the impact was positive. The latter group includes supermarkets and electronic commerce companies.

IBGE said seven out of ten companies saw a drop in sales and goods due to the pandemic.

(This story fixes word order in first paragraph)

Reporting by Alberto Alerigi, writing by Carolina Mandl; Editing by Alistair Bell

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