COVID-19, public agglomerations and economic effects: Assessing the recovery time of passenger transport services in Brazil

The outbreak of COVI-19 and the restrictive measures on the mobility of people in Brazil have raised serious concerns about the survival and recovery of passenger transport companies, especially those that generate public agglomerations. There are some policy proposals that aim to recover this set of sectors in the face of the adverse effects of the COVID-19 outbreak. This study contributes to this debate in course and analyzes the economic effects of two scenarios of recovery for this type of transport services in the Brazilian economy up to the end of 2022: (i) one with a 50% recovery until the end of 2021 and (ii) another with a 50% sectorial recovery until June 2022. This distinction allows us to assess the impact of the speed of recovery. In both scenarios, we also consider likely changes in the labor market, family preferences, and government spending. To accomplish this task, we developed a dynamic computable general equilibrium model that recognizes a Social Accounting Matrix (SAM) and has details of the transport sectors. The main findings suggest that the drop in these transport services is the main contributing factor to the decline in the Brazilian GDP growth (−2.2%) in the period of social distance measures. However, faster recovery of these sectors can generate a marginal effect of 0.5 percentage points on GDP at the end of 2021. In the recovery period, due to the redistributive effects of income, the family demand for public transport is expected to grow post- COVID-19 outbreak, while the demand for private transport is reduced, especially in the basket of goods of the poorest households. Vehicle, bus, and aircraft manufacture seems sensitive to the recovery time of the demand for transport services with public agglomerations.