Poverty & Equity Brief Latin America & the Caribbean Brazil October 2021 The economic crisis triggered by the COVID-19 pandemic led to a historical decrease of 4.1 percent in GDP and the loss of more than 10 million jobs during the first three quarters of 2020. The services sector, home to a large share of the informal and low- skilled workforce, contracted by -4.5 percent. Poverty was expected to surpass the 2019 rate of 19.6 percent ($5.50 per day in 2011 PPP terms), as observed in most countries in the region. However, the launch of a large emergency cash program led to lower poverty rates. The expected economic recovery in 2021 is not likely to keep poverty levels in a downward trend. Moreover, food insecurity - already higher in 2020 than 2019- may continue to increase without stronger support among low- income households or if the recovery does not ramp up substantially. By 2019, the income of the most vulnerable in Brazil was lower than it was at the onset of the 2014-16 recession. Between 2014 and 2019, the slow job creation and limited expansion of the country's safety net likely contributed to 5.7 million individuals falling into poverty, and 4.2 million into extreme poverty (earning less than $1.90 per day 2011 PPP). Unemployment rates almost doubled and reached 11 percent in Q4 2019, with women, especially AfroBrazilian women, performing worse (13.1 and 18.8 percent, respectively) than men. Unfortunately, during the same period, the average number of families receiving benefits from Brazil's main safety net program dropped by about 200,000. Inequality in Brazil, measured by the Gini index, was largely unchanged between 2019 (53.4) and 2012 (53.5). Racial disparities in access to services continue to be of concern: about 15 percent of the AfroBrazilian population reside in dwellings without a water network connection (compared to 9 percent in the rest of the population) and an 18 percent suffer from unimproved sanitation facilities (9 percent among other groups). Spatial inequalities in Brazil are also worth highlighting. The north region is the least developed, with poverty rates of 35.3 percent, almost twice the national average. In contrast, in the south, poverty is 7.7 percent. About half of the children under 18 years old living in the northern region are considered poor. Since about 28 percent of them do not have internet access at home, their prospects to learn during the recent school closures are low thus further shedding light on the persistence of intergenerational immobility. Number of Poor Rate POVERTY (million) (%) Period National Poverty Line N/A N/A N/A International Poverty Line 9.7 4.6 2019 4.9 in Brazilian real (2019) or US$1.90 (2011 PPP) per day per capita Lower Middle Income Class Poverty Line 19.2 9.1 2019 8.3 in Brazilian real (2019) or US$3.20 (2011 PPP) per day per capita Upper Middle Income Class Poverty Line 41.4 19.6 2019 14.3 in Brazilian real (2019) or US$5.50 (2011 PPP) per day per capita Multidimensional Poverty Measure 5.3 2019 SHARED PROSPERITY Annualized Income Growth per capita of the bottom 40 percent -1.29 2014-2019 INEQUALITY Gini Index 53.4 2019 Shared Prosperity Premium = Growth of the bottom 40 - Average Growth -1.41 2014-2019 GROWTH Annualized GDP per capita growth -1.28 2014-2019 Annualized Income Growth per capita from Household Survey 0.12 2014-2019 MEDIAN INCOME Growth of the annual median income/consumption per capita 0.02 2014-2019 Sources: WDI for GDP, National Statistical Offices for national poverty rates, POVCALNET as of September 2021, and Global Monitoring Database for the rest. Poverty Economist: Gabriel Lara Ibarra POVERTY HEADCOUNT RATE, 2001-2019 INEQUALITY TRENDS, 2001-2019 Gini Index 70.0 45 18 40 16 60.0 35 14 50.0 30 12 40.0 25 10 20 8 30.0 15 6 20.0 10 4 10.0 5 2 0 0 0.0 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Poverty International Poverty Line Lower Middle IC Line GDP per capita, rate Upper Middle IC Line National Poverty Line $ 2017 PPP (%) GDP (Thousand) Source: World Bank using PNADC-E1/SEDLAC/GMD Source: World Bank using PNADC-E1/SEDLAC/GMD KEY INDICATORS Upper Middle Income line(%) Relative group (%) Distribution among groups: 2019 Multidimensional Poverty Measures: 2019 (% of population) Non-Poor Poor Bottom 40 Top 60 Urban population 84 16 36 64 Monetary poverty (Income) Rural population 61 39 62 38 Daily income less than US$1.90 per person 4.6 Males 80 20 40 60 Females 80 20 40 60 Education 0 to 14 years old 65 35 61 39 At least one school-aged child is not enrolled in school 0.4 15 to 64 years old 82 18 38 62 No adult has completed primary education 16.0 65 and older 96 4 16 84 Without education (16+) 78 22 46 54 Access to basic infrastructure Primary education (16+) 78 22 44 56 No access to limited-standard drinking water 1.7 Secondary education (16+) 84 16 38 62 No access to limited-standard sanitation N/A Tertiary/post-secondary education (16+) 97 3 10 90 No access to electricity 0.2 Source: World Bank using PNADC-E1/SEDLAC/GMD Source: World Bank using PNADC-E1/SEDLAC/GMD Notes: N/A missing value, N/A* value removed due to less than 30 observations POVERTY DATA AND METHODOLOGY To make meaningful international comparisons, poverty is calculated using the same methodology across countries, that is, using the same consumption or income aggregate and poverty line. For this purpose, the World Bank publishes poverty rates calculated using three poverty lines: $1.90, $3.20, and $5.50 per person per day, in 2011 PPP terms. Brazil does not have an official poverty methodology, but the National Statistical Office (IBGE) has published national poverty rates based on several administrative and international lines. The household survey used to calculate poverty since 2001, the PNAD, was replaced by the PNAD-Continua (PNADC) in 2012. These two surveys are not strictly comparable. This limits the extent to which poverty and inequality dynamics before and after 2012 can be analyzed. HARMONIZATION The numbers presented in the brief are based on the regional data harmonization effort known as the Socio-economic Database for Latin America and the Caribbean (SEDLAC) - a joint effort of the World Bank and CEDLAS from the National University of La Plata (Argentina). SEDLAC includes 18 countries and more than 300 household surveys since the 80s. Several Caribbean countries have not been included in the SEDLAC project due to lack of data. Since an income-based welfare aggregate is widely used in the region for official poverty estimates, income-based microdata is used for the Global Monitoring Database (GMD) and Global Poverty Monitoring. SEDLAC covers demographics, income, employment, and education. Terms of use of the data adhere to agreements with the original data producers. Latin America & the Caribbean povertydata.worldbank.org Brazil www.worldbank.org/poverty