Under Bolsonaro, Brazil gets poorer – 07/16/2022 – Market

Brazil became poorer during the government of Jair Bolsonaro (PL), and not just because of Covid or the War in Ukraine. When he took office, in a scenario of an economy still weakened by the recession of the Dilma Rousseff (PT) and Michel Temer (MDB) years, the president made choices.

It reduced public investments, made little progress in the reform agenda and stopped Bolsa Família, allowing the program’s queue to grow. With the social crisis worsening three months before the election, the president and allies take over a PEC to distribute R$ 41.2 billion in aid. To get rid of the Electoral Law, which only allows something like this in an exceptional environment, the package includes Bolsonaro signing a decree to put Brazil in a state of emergency that does not exist.

The GDP (Gross Domestic Product) per capita, an indicator that shows the production of wealth divided by the number of inhabitants, closed last year at US$ 7,500 (R$ 41 thousand). It is about US$ 5,726 (R$ 31 thousand) less than the peak, registered in 2011. The current value is equivalent to the level of 2007. In 2018, the last year of the Temer government, the indicator was at US$ 9,151.40 (R$ 9,151.40). $49 thousand).

Data on the average income of Brazilians also show this impoverishment. The average income fell from BRL 2,823 at the beginning of 2019 to BRL 2,613 in the March to May quarter of this year, according to the IBGE (Brazilian Institute of Geography and Statistics).

Even before the pandemic, this value had already been falling: in the quarter from December 2019 to February 2020, the average Brazilian income was R$ 2,816.

In 2019, the Bolsa Família program suffered the biggest drop in history, falling from 14 million to 13 million families. The queue exceeded 1.5 million.

“There was negligence regarding the social situation of the country even before Covid”, says economist Débora Freire, professor at the Center for Development and Regional Planning at UFMG (Federal University of Minas Gerais).

“Economic crises happen, they bring negative impacts, but the way they deal with them makes a lot of difference. The government now uses these events as an excuse, but the truth is that it was its duty to make public policies more efficient”, she says.

“I attribute today’s problems to the economic policy model, which does not provide stimuli for recovery and left the social area aside. Before Covid, Bolsa Família had huge queues. Families that were impoverished in the crisis, already eligible for the program , were not being met. This could not have happened, because once a family falls into extreme poverty it can take generations to recover.”

Economist Fernando de Holanda Barbosa Filho, a researcher at FGV-Ibre (Brazilian Institute of Economics of Fundação Getulio Vargas), believes that the genesis of impoverishment lies in the inability of governments to adjust public accounts, which would increase the confidence of private companies to increase investments, job creation and income growth.

That is, to make the wheel of growth gain virtuous momentum.

“My view is that the process of gradual impoverishment that we are experiencing stems from a fiscal problem that has not yet been solved, and that we are heading towards another lost decade without an end to this problem”, he says.

“Between 2015 and 2016, we had a crisis in public accounts, caused by the increase in spending by the Dilma Rousseff (PT) government, which was seeking reelection, there we went from surplus to primary deficit.”

In the PT’s second term, the country officially faced a recession, according to Codace (Committee on Economic Cycles Dating).

Social Assistance disbursements, not counting the BPC (Continued Benefit), but including Bolsa Família and the successor Auxílio Brasil, stagnated at R$43 billion from 2015 to 2019, on the eve of the pandemic.

They took a leap only after the release of Emergency Aid, which was supposed to be R$ 200, but reached R$ 600 after an arm wrestling between the government and Congress, which insisted on increasing the value.

These data are part of a survey carried out by researchers Carlos Bastos and Julia Braga from the Public Sector Economics Group at the Federal University of Rio de Janeiro. The duo is finalizing a study on the effects of the spending cap, since its creation, on the application of the Budget. The bottom line is that it works.

“The ceiling was very successful in holding the increases, but it is also clear that the expenses with less political support or interest of the command of the time are more sacrificed”, says Bastos. “As we predicted, social spending was squeezed.”

The resources destined to initiatives that serve to support the expansion of social well-being, in areas such as work, sanitation, housing, leisure and culture, have plummeted. They fell from BRL 111.6 billion in 2015, a year before the ceiling was created, to BRL 73.4 billion last year, a 34% drop in inflation-adjusted values.

The PEC of the elections, in turn, goes against the solution, says Barbosa, from FGV. “There is no doubt that it is focused on electoral aspects, because there is no program to combat structural poverty in making transfers and giving incentives for three months.”

Economist Sandra Brandão, who has been carrying out surveys on social spending since the time she was chief of information for former President Dilma Rousseff, highlights the strong retraction of resources in another area, the support network for assistance benefits.

It practically halved during the Bolsonaro administration, and received R$ 2 billion last year.

The Suas network (National Information System of the Unified Social Assistance System), which took care of policies to support program beneficiaries, such as the Cadastro Único in the former Bolsa Família, was practically dismantled and transferred to a virtual operating system of Caixa.

“Of course, the government needs to be digital, but many people do not have access to the internet or have difficulty dealing with it”, says Brandão. “I have no doubt that the lines with people trying to register to receive the benefit, now called Auxílio Brasil, are related to the dismantling of the register, worsening the situation of the most vulnerable population.”

One of these people is Beatriz Cristina dos Santos Silva, 22, is a single mother to Maitê, who is five months old. She has never had a formal job, but she says she earned an average of R$3,600 as a commercial manager.

Since May, three times a week, she has been taking a two-hour trip from Mairiporã (SP), where she lives, carrying a basket of sweets and her daughter on her lap, to sell brigadeiros and brownies near a mall in the east of São Paulo. . This is her only livelihood.

She tried to be a caregiver in a hospital, but her daughter became ill under someone else’s care. “I realized it was too early to leave it, so I started watching videos on the internet and learned how to make the sweets from a pastry chef,” she says.

She won customers, but says that sales have dropped in the last four weeks. “They were terrible. I leave the house with 10 to 12 boxes. I don’t always sell everything, but normally, the net profit in a good month is R$1,400, and R$1,000 in a bad month.”

His concern now is finding a new place to live. “The rent is up to date, but suddenly I was told that I would have to vacate the house. I felt very bad,” she says.

She says that the only social benefit she has received so far was three installments of R$ 600 from Emergency Aid. “I tried to update CadÚnico to get the Auxílio Brasil, but they are asking for a document that I don’t have.” As she is not a contributor to the INSS, she also did not receive the maternity allowance.

Sought to comment on Silva’s difficulty in updating CadÚnico, the Ministry of Citizenship did not respond until the conclusion of this article.

64% of Brazilians say they suffer budget restrictions after the pandemic; global average is 46%

The impoverishment of Brazilians in recent years appears in different data, but a consumption indicator brings a new facet of this situation, the worsening of the feeling of loss of purchasing power on an international scale.

A survey carried out in 100 countries by Nielsen Media Research, a global consumer market research company, shows that 64% of Brazilians declare that they have started to experience budget restrictions after the pandemic. The number is well above the general sample, in which 46% said they had become financially constrained.

“There is a combination of two factors that can explain this”, says the Spaniard Roberto Butragueno, Nielsen’s retail director. “Brazil was one of the countries that suffered the most from the effects of the pandemic, when you look at the contagion and the number of deaths, and also where the prices of basic products increased the most.”

Nielsen has access to points of sale, such as supermarkets and pharmacies, on a global scale, and cross-referenced the data. The basic consumer basket rose 30% in Brazil between 2019 and 2021. “It is a much higher variation of the IPCA, the official inflation index, and there is nothing like it in Europe or the United States”, he says.

In Mexico, for example, variation was around 20%, in the United States, 10%.

The research also portrays how Brazilians try to get around this harsher reality by changing habits. In terms of meat, for example, there is an increase in the search for frozen cuts, which cost 25% less on average than the fresh version. One of the most sought after products in beef protein became liver, whose kilo costs 50% less than the average price of the category.

There is a disheartening effect. A third say they don’t feel like going out to spend. Almost half, 46%, reduced street meals, and 21% concentrated their purchases on food.

Eduardo Yamashita, Director of Operations at Gouvêa Ecosystem, another consultancy specializing in consumption and retail, does not see a radical change in this scenario in the second half of the year. The reason is simple, lack of money persists, even with the improvement in the job market.

In the quarter through May of this year, the unemployment rate dropped to 9.8%, the lowest level for the range since 2015, but income is down 7.2% for the year.

“During the height of Covid, we had a strong injection of public resources into the economy, with the printing of money in many countries, which led to a significant increase in the wage bill – that is, the amount of money available for a good part of 2020, and a little less in 2021”, he says.

“When emergency aid was cut in Brazil, the amount of money was going back to pre-pandemic, but then came inflation.”

It was set up in 2022, defines Yamashita, a classic crisis scenario, with chances of cooling down in 2023, if inflation subsides. And the package of benefits approved in Congress with the support of the government does not change its scenario.

“The aid that is coming is timid compared to that offered at the height of the pandemic, the number of people who will receive is smaller, because there are restrictions, the volume of money is lower, and inflation is much higher”, says Yamashita. “Obviously it will be positive and help, but we will not have the effect that we saw before, such as high sales of electronics, boom in renovations and even an increase in protein consumption.”

The association of falling incomes, high inflation and, consequently, interest rates, to hold down prices, slows down the economy and increases the impoverishment effect. Take the case of businessman Pedro Bressane. He closed one of his pizzerias in April this year after trying to keep it going with the profits from the other two units.

According to him, demand for pizza exploded in 2020, but customers disappeared at the end of last year. For Bressane, the fall in family income and the increase in food prices were decisive.

“I was in a good region of Osasco, upper middle class. I hired influencers, invested R$ 4,000 in ads on Instagram, but sales stopped, and the inputs only went up”, says Bressane.

“I paid about R$ 35 for the tomato box. When I closed it, it was R$ 200 for the box”, he says. In an attempt to keep the store, the businessman made adjustments to personal expenses and sold a car. Already the daily habit of going out to dinner with his wife became almost monthly.

He hired four realtors to pass the point, but within five months, no interested parties showed up. “In order not to get into debt, I closed it.”

Havolene Valinhos and Ana Paula Branco collaborated

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