Brazil's new middle class faces plunge back to poverty

AFP, CAIEIRAS: Brazilian Monica de Oliveira thought she'd forever left behind those days of worrying about getting her daughter new clothes.
As part of a wave of poor Brazilians to enter a basic sort of middle class in recent years, de Oliveira was a Latin American success story. But for how much longer?
Biting recession in the world's seventh biggest economy is starting to undermine the country's widely lauded progress in dragging some 40 million people out of poverty, starting in 2003.
De Oliveira knows what it's like to be one of them and now she's afraid her family is sliding back. She and her husband had a combined monthly salary of about $500 working as security guards in Caieiras, near Sao Paulo, and both have been laid off.
One by one their little luxuries have disappeared. Family outings on the weekend are over, the dream of a new car and bigger house is on hold. Even interest payments on debts are no longer feasible. "Soon there will be no new clothes for my daughters. We won't go to the circus, we won't go out to McDonalds," de Oliveira, 36, said. "I wanted to pay for them to study, to give them a better life."
She's far from alone.
Of the masses lifted from poverty under the leftist presidencies of Luiz Inacio Lula da Silva between 2003-2010 and his current successor Dilma Rousseff, some three million families will reenter poverty in the next two years, economist Adriano Pitoli, from Tendencias consultants, predicts.
At the economic peak in 2010, when GDP grew at 7.5 percent, Brazil seemed to have it made.
Demand, especially from China, for Brazilian commodities such as iron ore and beef, created a boom reaching the lowest rungs of society, with many getting first time access to previously inaccessible goods like air conditioning and consumer products.
"Before we felt that things could only get better," de Oliviera said. "Now, jobless, we have nothing."
The macroeconomic outlook gives no reason for people like de Oliveira to feel optimistic.
Recession has been officially underway since the second quarter of this year, with GDP forecast to drop three percent, and is forecast to last two years, the first time that has happened since 1931. Inflation is on course to hit double digits. Unemployment has been rising for eight months, reaching the highest rate since 2009 at 7.6 percent.
Making matters worse, Rousseff's battle with a hostile Congress has created gridlock and could still lead to an often threatened impeachment trial. Meanwhile, economic reforms demanded by markets sit idling and investors, already dealing with a vast corruption network
uncovered at Petrobras national oil corporation, are spooked.
On the micro level, rising interest rates make debt payments ever harder for ordinary Brazilians, removing them from their role in the last decade as the drivers of a powerful domestic economic expansion.

Brazils new middle class faces plunge back to poverty

AFP, CAIEIRAS: Brazilian Monica de Oliveira thought shed forever left behind those days of worrying about getting her daughter new clothes. As part of a wave of poor Brazilians to enter a basic sort of middle class in recent years, de Oliveira was a Latin American success story. But for how much longer? Biting recession in the worlds seventh biggest economy is starting to undermine the countrys widely lauded progress in dragging some 40 million people out of poverty, starting in 2003. De Oliveira knows what its like to be one of them and now shes afraid her family is sliding back. She and her husband had a combined monthly salary of about $500 working as security guards in Caieiras, near Sao Paulo, and both have been laid off. One by one their little luxuries have disappeared. Family outings on the weekend are over, the dream of a new car and bigger house is on hold. Even interest payments on debts are no longer feasible. Soon there will be no new clothes for my daughters. We wont go to the circus, we wont go out to McDonalds, de Oliveira, 36, said. I wanted to pay for them to study, to give them a better life. Shes far from alone. Of the masses lifted from poverty under the leftist presidencies of Luiz Inacio Lula da Silva between 2003-2010 and his current successor Dilma Rousseff, some three million families will reenter poverty in the next two years, economist Adriano Pitoli, from Tendencias consultants, predicts. At the economic peak in 2010, when GDP grew at 7.5 percent, Brazil seemed to have it made. Demand, especially from China, for Brazilian commodities such as iron ore and beef, created a boom reaching the lowest rungs of society, with many getting first time access to previously inaccessible goods like air conditioning and consumer products. Before we felt that things could only get better, de Oliviera said. Now, jobless, we have nothing. The macroeconomic outlook gives no reason for people like de Oliveira to feel optimistic. Recession has been officially underway since the second quarter of this year, with GDP forecast to drop three percent, and is forecast to last two years, the first time that has happened since 1931. Inflation is on course to hit double digits. Unemployment has been rising for eight months, reaching the highest rate since 2009 at 7.6 percent. Making matters worse, Rousseffs battle with a hostile Congress has created gridlock and could still lead to an often threatened impeachment trial. Meanwhile, economic reforms demanded by markets sit idling and investors, already dealing with a vast corruption network uncovered at Petrobras national oil corporation, are spooked. On the micro level, rising interest rates make debt payments ever harder for ordinary Brazilians, removing them from their role in the last decade as the drivers of a powerful domestic economic expansion.