Capping a week filled with excellent economic news, the Brazilian Employment Ministry released numbers showing the creation of 299,400 formal jobs in the month of August 2010, the most ever recorded for the month of August since monthly data began to be tracked in 1992. This number exceeded forecasts, which were expecting approximately 230,000. So far for the first eight months of 2010, 1.954 million new jobs have been created in Brazil, also a record. The previous record for the same period was 1.803 million in 2008.
The crisis of 2008, which has hit the United States and Europe especially hard, lasted for only two quarters in Brazil: 4Q-2008 and 1Q-2009. Since then, Brazil has experienced five straight quarters of strong economic growth, and the GDP growth for 2010 is expected to finish the year over 7%, the highest annual GDP growth recorded since 1984.
And it's not just the upper classes who are reaping the benefits of this recovery: from 2008 to 2009 alone, 3.1 million people passed out of poverty into the middle class, boosting the middle class population of Brazil to 50.5% of the total. This means that 2009 is the first time in the history of Brazil that the middle class forms a majority of the country. Just eight years ago, this number was only 37%.
The reasons for this recovery are simple: social programs such as Bolsa Família in place before the crisis which inject money into the economy at the lowest level... where it is spent on necessities. Increased consumer spending drives increased sales, which require companies to hire new workers, putting more money into the hands of consumers, etc. Brazil has generally relied on a strong export sector to keep its economy running - this sector collapsed when the US and Europe went into recession, but the internal consumer market has blossomed at the same time... and more than made up for the difference.
Brazil's biggest obstacles now are antiquated infrastructure which adds unnecessary costs and an insufficient number of skilled, educated workers which restricts the hiring ability of companies. Investment in infrastructure has gone up in the last couple of years, but much more is needed.
Source articles (in Portuguese):
http://economia.ig.com.br/...
http://economia.ig.com.br/...