A decade after the creation of the term "new middle class", this proportion of the population of Brazil rose again from 2017 to 2018 – from 50% to 51% of the population, an addition of more than 2 million people – after a fall in the previous two years . Although they have not yet restored everything they lost in the period when the economy fell by 8 percent, the C-class families are optimistic about what is to come and want to return to buying more value-added products such as appliances and building materials. According to a study by the Instituto Locomotiva. But the pursuit of these goals will not be at all cost: the consumption interpretation of the bonanza times has been replaced by the requirement for a clear cost benefit.
Renato Meirelles, president of the Locomotive Institute, specializes in studying class C habits. With the still modest increase – 0.9% – of the last income of this contingent, to convince the 106 million middle-class members to spend that money, they have in their hands – estimated 1.57 trillion in 2019 – companies will sweat. "The brands need to know much more about the habits of these consumers to convince them to open the wallet," says Meirelles. "Consumption now will no longer be associated with access at any cost, for delay, but for product performance and relevance."
This return to consumption is based much more on expectations than on consistent economic progress. This is because both employment and income are still far from recovering before the crisis. Despite falling inflation and base rates of at least 6.5% per year, unemployment is around 12%, according to data from the Brazilian Institute of Geography and Statistics (IBGE).
For this year, however, GDP growth expectations are still approx. 2%, despite recent reductions in estimates, which may have a positive effect especially for the middle class. According to calculations from MacroSector consulting, income in class C may grow 3.5% by 2019, compared to last year. The consultant also prepares a 3% increase for retail sales this year.
However, all of these perspectives depend on factors that have not yet taken place – such as the approval of structural reforms in Congress. According to José Ronaldo Souza Juni, economist at the Department of Applied Economic Research (Ipea), "there is an expectation of growth supported by the approval of reforms. If this does not happen, we can go into a crisis worse than 2014."
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