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A brief overiew of poverty and inequality in Brazil

Brazil represents roughly 50% of South America’s total population. Therefore, what happens in Brazil matters for the entire continent. Due to Brazil's good performance between 2010 and 2014, the share of extreme poverty in South America dropped significantly in 2014. This result was, unfortnately, shortlived. Indeed, Venezuela's increasingly deteriorating situation may well prevent the continent from achieving SDG1.1 by 2030. Not even surprisingly strong performance of Colombia which has driven its share of extreme poverty down immensely from over 7% in 2010 to beneath 2% in 2030 will likely be enough to change that. 

Inequalities and regional performance

That somewhat murky outlook for South America, however, should not obscure expectations for Brazil. Our data show that in the year 2000 the Gini-coefficient (a measure of inequality) stood at 0.59 and has been broadly declining ever since. Following a review and analysis of World Poverty Clock data, we are also able to support the claim of FGV Social that, between 2014 and 2018, Brazils' Gini-coefficient broke this trend and began to rise again, settling at some 0.52 in 2018. Against this backdrop, and assuming economic forecasts of the IMF prove to be true, we predict that the Gini-coefficient will broadly remain on this level until 2030, perhaps not as low as it could have been under a rosier scenario between 2014-2018, but still low enough to support halving the number of people living in extreme poverty in Brazil.

Income levels are also unequally distributed between regions in Brazil. The Brazilian enterprise OUT3 – Creative Solutions and World Data Lab are currently partnering to develop real-time poverty and middle-income spending forecast models for every Brazilian state and city. Our forecasts are based on Brazilian household surveys and national economic growth rates - with the latter currently being refined for regional rates. Our (preliminary) data for four important states from Northeastern Brazil one of the poorest regions of the country – show that Alagoas has the highest share of extremely poor people in its population in 2018 with Maranhão's share representing the second highest and Ceará third. Pernambuco performs best and most probably will be the only one of the four states of the region to successfully reduce its share of extreme poverty below the 3% threshold within the next five years.

Champions from the public and private sectors are welcome to support the collection of data from other states and municipalities in Brazil. These subnational forecasts are paramount to the country because even though poverty is likely to decline, pockets of extreme poverty as well as very vulnerable populations will persist, and therefore a subnational poverty mapping project is needed.

The case of Brazil shows that, following the reforms initated in 2010, many people remain at the lower end of the middle class – and, therefore, are vulnerable to economic shocks. Using data drawn form our global spending model (marketpro.io) and reviewing Brazil's experience during the height of the most recent crisis (between 2014-2017), we can observe that the lowest income segment grew by some 10 million people whereas the middle-income group lost 4.5 million (the remainder coming from population growth of around 5.2 million). 

Nevertheless, over the long-term, we estimate that the Brazilian middle class will continue to burgeon, continuing the trend which started more than 10 years ago. In 2007, there were already more people in the middle income group (99 million people) than in the vulnerable and poor income group (92 million people). Since then no major shift occurred, and thus, we forecast that, if economic conditions remain stable, Brazil will continue to make strides in reducing extreme poverty.

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