Chronicle of a Crisis Foretold: External Shocks and Middle-Class in Brazil


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The research shows that the international financial crisis had a relatively mild impact on Brazilian society until the end of 2008. The research also draws future perspectives for the country. The study shows that Brazil is following a different path a kind of middle-road between the Washington Consensus and the enlarged states role played in social democracies (or in Chavez 21st century Socialism position). Brazil respects market laws and provides sound economic incentives but at the same time applies and develops new tools for social public policies. This odd combination makes the Brazilian experience an interesting case for analysis and explain the country relative improvement in international rankings after the first signs of the crisis in mid-2007. On the week when the research was released, The Economist published an article on the new middle Brazilian middle class, based on our previous study.
The core of the current research is the analysis of the movements of individuals within the different economic stratus. It shows that the C class – the emerging new middle class – continues expanding at a 3,7% rate comparing the of 2008, reaching in December 2008 53,8% of the total of Brazilians in the six larger metropolitan areas. Classes A and B also grew 3,9% in the same period with a corresponding decline in A and E classes. Starting in September 2008 A & B classes start showing a reduction as a result of the crisis, but class C continued expanding. Besides constructing aggregated series, the research takes advantage of longitudinal data that follows the same individuals across time. Before the crisis 19 out of 100 that were initially located in the AB segment fell, while after he crisis 25 fell, that is six percentage points more. The research shows that although the incomes and jobs in the manufacturing, financial and real state sectors fell in the last september crisis aftermath, the mild size of the fall and the relatively small size of these sectors with respect to the Brazilian economy makes the crisis impact mild in Brazil.
The Center for Social Policies from Getulio Vargas Foundation attempts to create a window into the Brazilian society from a point of view of the policy maker, analysts and the common citizen from Brazil or elsewhere. The research makes available data and analysis on the effects of the crisis in Brazil. The interactive data set made available by the research allows to grasp who is the main losers and gainers in the recent Brazilian scenario.