The lost 'middle' class

The wave of poor Brazilians who entered a basic sort of middle class in recent years was a Latin American success story but now it seems to have ended. Recession in the world’s seventh biggest economy is starting to undermine the country’s widely lauded progress in dragging some 40 million people out of poverty, starting in 2003. One by one little luxuries have disappeared.

“If we consider the population which came up from poverty to the middle class, we see people with low education, without savings, and taking jobs which require few qualifications,” Mauricio de Almeida Prado, director of the Plano CDE think tank, said. “Now all these people are very vulnerable,” he said. 

 Some three million families will reenter poverty in the next two years, economist Adriano Pitoli, from Tendencias consultants, predicts.

At the economic peak in 2010, when GDP grew at 7.5 percent, Brazil seemed to have it made. Demand, especially from China, for Brazilian commodities such as iron ore and beef, created a boom reaching the lowest rungs of society, with many getting first time access to previously inaccessible goods like air conditioning and consumer products.

Now recession has been officially underway since the second quarter of this year, with GDP forecast to drop three percent, and is forecast to last two years, the first time that has happened since 1931. Inflation is on course to hit double digits. Unemployment has been rising for eight months, reaching the highest rate since 2009 at 7.6 percent. Rising interest rates make debt payments ever harder for ordinary Brazilians.