Weekly Report - 19 December 2006

BRAZIL: Middle class stagnates. The Brazilian middle class has "stagnated", according to a study by the influential current affairs magazine Veja. The report claims that the number of middle class Brazilians (those earning the equivalent of US$3,000 to US$15,000 monthly) has increased from 20% of the population ten years ago to 21% of the population now; at the same time, the middle class has more than doubled over this period in China, India and Russia, countries with which Brazil is usually compared. The reason given for this stagnation is the increasing tax burden, which equalled 28% of the average income in 1994 and is approaching 40% now, as well as rising expenditure for health care and education, services that should be covered by taxes but that devour 31% of the income of an average middle class family (up from 12% in 1980). The official statistics agency (Ibge) said that middle class families were able to save up to 11% of their income in 1997. Ten years on, this figure is closer to 4%.

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