World Economy

Struggle of Brazil’s Middle Class Continues

Struggle of Brazil’s Middle Class ContinuesStruggle of Brazil’s Middle Class Continues

The images from the summer Olympics in Rio de Janeiro have been strikingly beautiful.  But underlying all that beauty is great turmoil as Brazil is in the grip of a crippling political and economic crisis. Ordinary Brazilians are feeling the pinch, especially those who live in the Rio slums called “favelas”.

Huberto Sousa spent most of his life renting beach chairs to tourists on Copacabana beach. Then in October 2010 he decided to open a small shop in the favela of Cantagalo, where he was born and raised, VoA reported.

Known in the neighborhood as “the king,” Sousa opened the “Kings Castle” and business took off.    

The year 2010 was a unique moment in Brazilian history. The economy was booming and many Brazilians moved out of poverty and into the middle class. Between 2003 and 2013, the median household income grew 87% in real terms.  But the good times didn’t last.

“The good times were when the middle class people from down there would come and socialize with people from the favela, and it was cool because it was a mix of those people. That was the best time, but it started to drop off about 2014.  And people would say they don’t have the money,” said Sousa.

  Economic Impact

Brazil’s economy hit a wall.  Some blame rising debt and cuts in government spending.  Others think of it as a convergence of economic forces—cuts in spending, consumption and investment.

Blame aside, Brazilian economist Rodrigo Magalhaes said the impact was felt hardest among people who had recently moved up into the middle class.

“When the recession began it broke the expectation of these people because in the last 10 years they had seen the situation getting steadily better and then it all collapsed,” said Magalhaes.

Public services like hospitals and public schools also have been hit hard. At the Amaro Cavalcanti School in Rio, the sign on the gate says: “The struggle has only just started.”   

Across Brazil, teachers like Fabiola Camargo have been on strike. And students have been occupying schools for weeks.

“We have not had a raise since 2014.  The occupations are supporting the strikes just as much as the strikes are supporting the occupations because they both wanted improvements in education. It is as if the federal government and the city of Rio wants to stop investing in schools,” said Camargo.

Unemployment in urban areas is reaching 8% and Brazil’s GDP is expected to dip another 2% this year. Economists don’t see any quick solution—a reminder that while the favela Cantagalo may have a beautiful ocean view, the outlook isn’t always pretty.