Poverty is expected to rise again to the same pre-pandemic level in Brazil

According to Daniel Duque, a researcher from Ibre/FGV, this will happen due to the reduction in the amount paid by Brazil's government emergency aid

Daniel Duque, a researcher in the field of Applied Economics at FGV IBRE. Photo: Courtesy
  • Daniel Duque, the researcher responsible for the publication, said that extreme poverty would rise even more strongly (reaching 5% of the population);
  • It will place extreme poverty at its highest level since the beginning of the survey.

Poverty is expected to rise again to the same pre-pandemic level in Brazil after having experienced casualties. Why? Due to the reduction in the amount of the Brazilian financial emergency aid from September until the end of the year. This is the conclusion of a researcher from the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre/FGV, in the acronym in Portuguese), who used Pnad Covid, a special survey from the Brazilian Institute of Geography and Statistics (IBGE) that monitors the impacts of the pandemic on the Brazilian labor market, as a basis.

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According to Daniel Duque, the researcher responsible for the calculations, the expansion of the emergency aid (created to soften the coronavirus pandemic economic effects) ended in August, and the percentage of households that received the benefit remained stable between July and August at a level close to 44%, reaching about half of the entire Brazil’s population.

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On a blog post (in Portuguese) Duque said that the stabilization of the emergency aid, however, did not prevent a further fall of the population below the poverty line ($5.50 per day) and extreme poverty ($1.90 per day), which reached new casualties 18.4% and 2.3%, respectively.

According to him, the average Brazilians’ income, in turn, increased considerably (2.4%), but also to a lesser extent compared to the previous months (2.8%). It was precisely the interruption in the growth of household income from emergency aid that was responsible for this reduction in the speed at which income has been increasing.

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Between September and the end of the year, the emergency aid will be reduced by half, from BRL 600 to BRL 300, affecting about 80% of the beneficiaries of the program in the coming months. According to Duque, this will lead to a 4 p.p. reduction in the average income – today the emergency aid accounts for almost 10% of the population income.

The levels of poverty and inequality would also be strongly impacted. Poverty would rise to the same level as May, reaching 23.7% of the population. And extreme poverty would rise even more, from just above 2% to 5% of the population.

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