Brazil Aid shall inject BRL 84 billion into economy

70% shall be allocated to immediate consumption

Published in 20/01/2022 - 11:16 By Alana Gandra - Repórter da Agência Brasil - Rio de Janeiro

The National Confederation of Trade of Goods, Services and Tourism (CNC), released on Thursday (19), a study according to which social welfare program Brazil Aid shall inject at least BRL 84 billion ($ 15 billion dollars) into the Brazilian economy this year. 70.43 percent, or the equivalent of BRL 59.16 billion ($ 10,7 billion), shall be allocated to immediate consumption, while 25.74 percent (BRL 21.62 billion - $ 3,9 billion dollars) shall be used to pay off or amortize debts and 3, 83 percent, or BRL 3.21 billion ($ 582 million dollars), shall be saved for future consumption.

Brazil Aid has superseded Family Allowance (Bolsa Família), which was extinguished last year, and its first monthly installments started to be paid to beneficiaries on Tuesday (Jan. 18).

CNC estimates that, considering the Brazilian spending structure, of the total amount of BRL 59.16 billion ($ 10,7 billion) that should be allocated to immediate consumption, about 47 percent shall be spent in trade and in the service sector. “We estimate that BRL 28 billion ($ 5 billion dollars) should reach commerce”, says CNN economist Fabio Bentes. This means a boost of 1 percent to 1.5 percent in the annual turnover of the national retail sector.

Bentes warned, however, that this will not save commerce sales in 2022. “But it may help trade to have a less bitter year at a time when the outlook for the economy 2022 has been corrected downwards. The economy is expected to grow 0.3 percent this year. So, it helps to make a little bit more resources available for consumption, which ends up relieving a little more the difficult year that the commerce shall have ahead”, says the economist.

Indebtedness

Given the population's level of indebtedness, the percentage of resources to be allocated to debt payment tends to be relatively high this time. According to data from Brazil’s Central Bank, 30.3 percent of the average income of Brazilians were committed to debt payments in the third quarter of last year, the highest level ever since this assessment first started in 2005. “But we know that, due to inflation, to higher interest rates, the commitment of income with debts should surely increase a little, at least in the first half of 2022”.

Translation: Mário Nunes -  Edition: Claudia Felczak

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