Gilberto Costa       Reporter Agência Brasil

Brasília – Sociologists and economists are warning that the choice by the Brazilian government to stimulate growth through consumption may have unintended consequences.

Cláudia Sciré, a sociologist who wrote a book entitled, Popular Consumption, Global Flux, says that for many Brazilians the journey out of poverty that is supposed to be an upward ascension into a new middle class has become a downward slide into a financial dead end (“financeirização da pobreza”). Sciré points to studies by Marcelo Néri, an economist at the Getulio Vargas Foundation (“FGV”), and Ricardo Paes e Barros at the Secretariat for Strategic Affairs housed in the Presidency of the Republic.

“This process deserves a closer look and some questions need to be asked,” says Sciré. “Are these people no longer poor? Is access to cultural events and quality education still difficult? Consumption alone is not an adequate parameter,” she declares.

Sciré questions the whole idea of whether or not this ascension into the so-called “Classe C” and the resultant indebtedness is sustainable where there has been an increase in income and consumption over the last decade. “We do not really know what is going to happen,” she says.

Uncertainty regarding the capacity of indebtedness and the efficiency of consumption as a stimulus also worries Fabio Giambiagi, an economist and one of the authors of Além da Euforia – Riscos no Plano Econômico.

“In spite of falling interest rates, Brazil’s interest rates remain much higher than in other countries. The result is that indebtedness in Brazil tends to siphon off a greater part of worker income. The payments Brazilians make on installment plans are just bigger than in most other countries,” says Giambiagi.

With respect to the recent decision by the Ministry of Finances to stimulate consumption to boost GDP growth through lower taxes on vehicles, for example, Giambiagi says: “The short-term logic is understandable. But in the medium- and long-term, it would be better to increase private and public sector spending.”

Allen Bennett – translator/editor The News in English – content modified

Link - Endividamento de consumidores e “financeirização da pobreza” preocupam especialistas