As Brazil's Economy Goes In Reverse, Illusion Of Prosperity Fades With It

As Brazil's Economy Goes In Reverse, Illusion Of Prosperity Fades With It

7:24pm Jul 27, 2015

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Only a few years ago Brazil was being celebrated for raising millions of people out of abject poverty. Now there are worries those gains may be at risk. The economy is shedding jobs and heading into recession. To explore this, NPR's Lourdes Garcia-Navarro traveled to the economic hub of Brazil, the city of Sao Paulo.

LOURDES GARCIA-NAVARRO, BYLINE: A TV is not just a TV, at least not for 31-year-old Daniele Dos Reis. Hers is a 32-inch plasma - nice, but nothing extraordinary - but for her...

DANIELE DOS REIS: (Foreign language spoken).

GARCIA-NAVARRO: "I cried with joy when I got it," she says, "it was as if it was the first toy I'd ever gotten in my life." It made her feel like she'd finally made it.

REIS: (Foreign language spoken).

GARCIA-NAVARRO: "My happiness about the TV was about seeing my children smile," she tells me. "It was new. They were so proud. They told everyone about it," she says. She's raising three children alone. Her salary was, until recently, around $350 a month, sometimes more. She was able to get a loan to buy the TV and a washing machine. She dreamt of owning her own home.

REIS: (Foreign language spoken).

GARCIA-NAVARRO: "I even bought the material to build it," she says proudly.

REIS: (Foreign language spoken).

GARCIA-NAVARRO: As she tidies up her one-bedroom rental in a poor suburb of southern Sao Paulo, Daniele Dos Reis tells me she represents a lot of the poor people in Brazil. Under previous President Luis Ignacio Lula da Silva - known simply in Brazil as Lula - a commodities boom of selling soybeans and iron ore to China financed an expansion of social programs, many of which Daniele benefited from. The minimum wage was raised, which put more money in people's pockets, including hers. Credit was made more widely available so the people from the lower social classes could afford TVs and refrigerators for the first time. That meant more jobs and a period of record employment. Daniele says she had work whenever she wanted it, until now. She just got fired.

REIS: (Foreign language spoken).

GARCIA-NAVARRO: "You become unemployed from one day to the next and then you're in debt. You owe on your rent. Our dreams are dead now," she tells me. "We all still have dreams, but no one believes they will come true anymore," she says. Brazil's economy is grinding to a halt. Inflation is rising and President Dilma Rousseff - narrowly re-elected last year - has instituted harsh austerity measures that have left supporters like Dos Reis feeling betrayed. And according to new statistics here, one million people last year returned to extreme poverty. So this is the great debate in Brazil right now - was what was touted as the Brazilian miracle only a mirage?

CLAUDIO FRISCHTAK: What the government did fail was to improve in a very significant manner education, health, public safety and infrastructure.

GARCIA-NAVARRO: Claudio Frischtak runs an economic consulting firm in Rio de Janeiro, and he is a former World Bank official. He says what was created was not a middle class, but a working-poor consumer class of people with cellphones and televisions, but with little to keep them from slipping down the economic ladder.

FRISCHTAK: Populist policies at their core, which were not sustainable, and at the end of the day, the policies which were instituted led to what we have now, which is a major economic crisis.

GARCIA-NAVARRO: That's only one point of view of course. Alexandre de Freitas Barbosa is an economist at the University of Sao Paulo and a self-described progressive. Brazil was one of the most unequal countries in the world and it's much less so now, he says.

ALEXANDRE DE FREITAS BARBOSA: I think it did change the fundamentals. We have a sort of basic safety net. We had lots of things we achieved in the last decade.

GARCIA-NAVARRO: But where economists agree is on the gloomy outlook right now. I went to visit Dilma Rousseff’s one-time economics professor who's a close friend and adviser of former President Lula. We had a long chat and in the end he said this...

LUIS BELLUZZO: (Foreign language spoken).

GARCIA-NAVARRO: "I'm going to be 73 years old, and I've been through many periods in Brazil's history, but I've never seen one so grave," Luis Belluzzo tells me.

UNIDENTIFIED WOMAN: (Foreign language spoken).

GARCIA-NAVARRO: A group of men on a recent sunny morning are being taught how to make crepes from a French volunteer working with NGO Projeto Arrastao. It's located in the neighborhood of Sao Paulo where Daniele Dos Reis lives. This area has the city's highest percentage of people in debt and in default, according to government statistics. This charity provides job training and classes on how to manage finances.

SELMA BERTAGNOLI: (Foreign language spoken).

GARCIA-NAVARRO: "The neighborhood was always poor," administrator Selma Bertagnoli tells me. "So there were always people wanting help, but not so many as there are now," she says. In 2012, they worked with, on average, 750 people a month. Now it's 1,600 to 1,800. Mainly, she says, they're seeing people who have been laid off and have no savings. The project trains them to be able to work in the informal sector so that they can get income quickly - making food, doing hair, sewing. She's not an economist, but from her perch, dealing with people on the lowest rungs of the economic ladder, the view is bleak.

BERTAGNOLI: (Foreign language spoken).

GARCIA-NAVARRO: "It was an illusion," she says. "It was really the illusion of being able to access a better life. It was a pseudo-ascension. Today, we are seeing the sad reality," she says. Lourdes Garcia-Navarro, NPR News, Sao Paulo. Transcript provided by NPR, Copyright NPR.

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