Brazil's Growing Middle Class

I've read several recent posts about Brazil's economy and growing middle class on blogs that I follow, so this article caught my interest.

According to the article, "an estimated 40 million people have joined the ranks of Brazil's middle class between 2003 and 2011, according to the Fundação Getulio Vargas economic think tank, providing them with greater purchasing power."

To qualify as a part of the middle class (or Class C, as it's identified in Brazil), you need a monthly income of $600-$2,950. That's an annual income range of $7,200-$31,080.  That's quite a range by US standards, with the lower end being drastically lower than what most North Americans would consider to be "middle class."  

In fact, the 2012 US poverty guidelines, published by the department of Health and Human Services, list an income of $11,170 as the poverty cutoff for a household with one person, and income as high as $23,050 for a family of 4 to be considered to be living in poverty.  

Another source gives additional insight into the concept of "middle class" as applied to Brazil: "It (the term middle class) remains hard to define, and attempts to do so often seem arbitrary. But in Brazil, the middle class describes those with a job in the formal economy, access to credit and ownership of a car or motorbike." 

So we're dealing with two very different sets of definitions here. Still, as the first article makes clear, what's important is that millions of people who never had any disposable income before, are now earning salaries that allow them to have some money left over after they meet all of their basic needs.  

This has led to an increased demand for some of the goods and services described in the article: cosmetic dentistry, inexpensive gyms, chocolates, and other items that would have once been considered luxuries far out of the reach of all but the affluent. Businesses have responded by offering less expensive versions of their products and services that are specifically aimed at middle-class consumers.  

As Brazil's economy has slowed down during the recent global economic recession, the government is hoping that middle-class consumers will help to pick up some of the slack with their increased purchasing power.  However, as the article points out, this hope may be clouded by the fact that middle-class Brazilians have already accumulated a fair amount of debt. 

Still, Brazil's economy has taken less of a hit than the economies of North American and European countries, and as more Brazilians enter the middle class, it will hopefully lead to even greater economic and social stability.