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The Covid-19 pandemic has made poverty to grow in Brazil. Data released on Friday (02/11) by the Brazilian Institute of Geography and Statistics (IBGE) show that, in 2021, the number of Brazilians living below the poverty line increased by 22.7% compared to 2020 and in extreme poverty went up by 48.2%, in the same period. In a scenario of growing interest rates and slowdown of the Brazilian economy, a great socioeconomic challenge can emerge for the next government.
Two Records
The two increases were records, according to the IBGE. Since 2012, the country had never registered such a huge increase in poverty and, above all, in extreme poverty. In absolute numbers, 11.6 million Brazilians now live below the poverty line. Another 5.8 million began to live in extreme poverty.
With this growth, Brazil now has 62.5 million people below the poverty line, of which 17.9 million were extremely poor. This is equivalent to saying that 29.4% of the Brazilian population was poor and 8.4% extremely poor.
According to the IBGE survey, it was in the North and Northeast regions that poverty had the greatest advance. The most serious situation, however, is that of the Northeast, which concentrates more than half of the extremely poor people in the country.
High Interest Rates and Slowdown of the Economy
The Gross Domestic Product (GDP) of Brazil grew 0.4% in the 3rd quarter of this year compared to the immediately previous three months, according to data released, on 1 December, by the Brazilian Institute of Geography and Statistics (IBGE).
The result confirms the signs of deceleration in the Brazilian economy, and the market expects that the activity will have a smaller growth next year. The main cause of this slowdown is the restriction on credit, limited by a Selic (basic interest rate) at 13.75% per annum.
Brazil has the highest real interest rate in the world, which should become even higher with the ongoing disinflation process. This inhibits investments in production, consumption and impacts the economy.
Loans to Pay Bills and Buy Food
Buying food and paying day-to-day bills are among the main reasons for the population of classes C, D and E to take out loans over the last few months in the country, according to a study conducted by the research institute Plano CDE.
When asked why they took or would take a loan, between 45% and 50% of respondents from classes C, D and E indicated that food and monthly bills were or would be the main purpose. This percentage drops to 30% between classes A and B.
