Only in 2024 did Brazil’s per capita GDP barely exceed the record value recorded so far in the distant year of 2013. From 2022 onwards, the economy entered a path of sudden recovery.
Enhanced activity and increases in welfare and social security benefits led to poverty reduction last year to the lowest rates recorded in the compilation of social indicators prepared by the International Institute for Social Statistics starting in 2012. Since then, the income of the poorest tenth of the population has grown the most, by 52.3%.
However, it is a relative success. The average household income for this tenth of the population is still R$248 per month in 2024 prices. It should be noted that the extreme poor, that is, 3.5% of Brazilians, are those with a per capita household income of R$218 or less; For the poor, 23.1% of the population, it is R$694 or less.
Among workers, 11.9% are poor; Among the unemployed, 47.6%. IBGE simulations show that the Gini index, which measures inequality from 0 to 1, rises from 0.502 to 0.542 when benefits such as Bolsa Família, BPC and others are ignored.
These figures indicate that social assistance, although necessary and relevant, is not sufficient to reduce poverty and glaring inequality in the country. The progress of the work, which depends on the progress of the GDP, is crucial.
The current unemployment rate is the lowest in the historical series, which began in 2012. The result is partly due to economic growth, the pervasive effects of government aid in poor areas and, in economists’ hypothesis, the effects of the CLT reform and new job requirements and offers, as is the case for platform workers. If growth is not a sufficient condition for improving income, growth is necessary.
The economy is currently slowing under the influence of the central bank’s aggressive monetary tightening, which is trying to contain hyperinflation, which is showing up in prices and the external deficit. The recent cyclical rise was exaggerated by excessive public spending promoted by the government of Luiz Inácio Lula da Silva.
Sectors most vulnerable to the impact of higher interest rates are now growing slightly. GDP is driven by exports, oil and agriculture. The second half of the year should see almost stagnant activity.
Last year, the expansion of national income reached 3.4%; In this case it should be about 2.2%. In the short term, this is as expected. For the pace to be faster, more sustainable and less volatile, the country needs budget reform, educational and scientific development, rationalization of the business world, review and increase social policies, and advance tax justice.
Warming up demand through continued increases in public spending is a strategy that only produces illusory short-term results. Sooner or later, we see, inflation and interest rates will rise, interrupting the good times.
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