Recession in Brazil means backslide for the fight against poverty

Demonstrators in favor of Brazilian President Dilma Rousseff's impeachment in downtown Rio de Janeiro, Brazil on April 4, 2016, Brazil. (Credit: Sipa USA via AP)

An escalating corruption scandal is dominating the political scene in Brazil. As President Dilma Rousseff faces a growing threat of impeachment, millions have turned to the streets in anti-government demonstrations across the country.

Meanwhile, Brazil has also been hit by the worst recession in more than three decades, following a drop in prices for Brazilian oil, sugar, coffee and other commodities. And in what’s probably an ill-suited political climate to address it, many are raising concerns that the country is not well equipped for the fight against poverty.

“We are worried. Brazil has been one of the most successful countries on this issue (of tackling poverty), and it carries on being very efficient,” Alicia Barcena told Reuters. Barcena, the head of the Santiago-based Economic Commission for Latin America and the Caribbean (ECLAC), a regional branch of the United Nations, added that the U.N. is concerned that progress Brazil has made in tackling poverty could reverse.

ECLAC Director Lais Abramo told Reuters that it will be critical for Brazil to continue government-led programs to tackle poverty. But considering the poor state of the Brazilian real, rising unemployment and a crumbling democracy, continuing the same level of support for anti-poverty programs may not be as much of a priority.

Brazilian economists warn that 2016 could see the economy shrink even more than in 2015, when it contracted 3.8 percentthe biggest contraction the country has seen in 25 years.

“Brazil has never had such a high level of uncertainty and this is freezing everything up. There is no consumption or investment or credit with this historic level of uncertainty,” Daniel Cunha, an analyst at XP Investimentos in São Paulo, said in an interview with Agence France-Presse.

Of equal concern for Brazilians is the rate of unemployment. About a third of unemployed Brazilians have been out of work for more than six months, according to Reuters, which is the highest rate the country has seen in 10 years. Unemployment skyrocketed in 2015, with economists predicting figures to go into double figures in the coming months.

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To add to the turmoil, more than 2 million Brazilians are now expected to lose unemployment benefits by June. Economists expect the downturn to, in turn, drive the unemployment rate to more than 10 percent.

“There is a vicious cycle in which political paralysis feeds the economic downturn that reinforces the political crisis,” Rafael Cortez, an analyst at consultancy firm Tendencias, told Reuters. “They are running against time, as unemployment data show. The sooner the impeachment vote happens, the higher the chances for the government are.”

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Lisa Nikolau

Lisa Nikolau is a Madrid-based reporter for Humanosphere, covering gender equality, indigenous rights and poverty in Latin America and worldwide. Find her on Twitter at @lisanikolau, email lisa.nikolau@humanosphere.org or see her latest work at www.lisanikolau.com