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Booming economy, government programs help Brazil expand its middle class

Economic growth and government programs are helping lift many Brazilians out of poverty and fueling a sense of optimism. Felipe de Souza Ramos, above, lives in an old Rio de Janeiro slum but dreams of pursuing his passion for music at a university.
Economic growth and government programs are helping lift many Brazilians out of poverty and fueling a sense of optimism. Felipe de Souza Ramos, above, lives in an old Rio de Janeiro slum but dreams of pursuing his passion for music at a university. (Juan Forero/The Washington Post)

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By Juan Forero
Washington Post Foreign Service
Sunday, January 3, 2010

RIO DE JANEIRO -- Teresiña Lopes Vieira da Silva peddles spices and peppers from a street stall, but hers is no fly-by-night business.

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She sells to restaurants in Rio's swankiest districts and sees her success reflected in the two houses she has bought. Instead of scraping by, she has joined the middle class in an increasingly affluent Brazil, her accomplishment made possible by government loans and a booming economy.

"Now I live in a house with six rooms," said Vieira da Silva, 62, speaking of her home in Rocinha, a poor but bustling district with growing ranks of entrepreneurs. "It does not have a pool yet, but I am planning to build one."

Once hobbled with high inflation and perennially susceptible to worldwide crises, Brazil now has a vibrant consumer market, investment-grade status for its sovereign debt, vast foreign reserves and an agricultural sector that is vying to supplant that of the United States as the world's most productive.

Brazil's $1.3 trillion economy is bigger than those of India and Russia, and its per-capita income is nearly twice that of China. Recent discoveries by Brazil's state oil company are expected to make the country one of the world's biggest crude producers. An unwieldy bureaucracy and red tape have not slowed foreign investment, which at $45 billion in 2008 is three times as much as it was a decade ago.

Economists and social scientists here say the booming trade-oriented economy and innovative government programs are lifting millions from poverty and shaking what was once a certainty: that a person born poor in Brazil would surely die poor.

Solid, tangible progress

Since 2003, more than 32 million people in this country of 198 million have entered the middle class, and about 20 million have risen above poverty, according to the Center for Social Policies at the Getúlio Vargas Foundation, a Rio policy group that studies socioeconomic trends.

"We can generate inclusive growth as probably no other country can, given the scale of the country and the level of inequality," said Marcelo Neri, chief economist at the center. "Brazil is following what you may call a middle path. We are respecting the rules of the market and, at the same time, we are doing very active social policy."

Since 2002, a commodities boom has fueled strong growth and lowered poverty across Latin America. But Brazil's progress is perhaps the most notable because it has far more poor people than any other South American country and has long been one of the world's most unequal societies.

Neri said Brazil has made solid progress by creating 8.5 million jobs since 2003, and by instituting programs such as food assistance for poor families and low-interest credit for first-time home buyers and small-business owners.

The change has been tangible to people such as Thiago Firmino, 28, a teacher. He has lived in a poor locality all his life, but he owns a car and a computer and says his son's life will be easier than his.

"A lot of people improved their lives," said. "It is not like they built themselves a castle, but, you know, they have taken little steps and made things better."


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