The improvement in extreme poverty was equally significant. The proportion of the population earning less than USD $35 per month fell from 5.9% to 4.4%, the first time the rate has dropped below 5%. Numerically, this represents a decrease of 3.1 million people, from 12.6 million in 2022 to 9.5 million in 2023. IBGE researchers and economic experts attribute this progress primarily to two factors: the expansion of social assistance programs, notably Bolsa Família, and substantial improvements in the national labor market.
Bolsa Família, a conditional cash transfer program established in 2003 and currently under the administration of President Luiz Inácio Lula da Silva, now supports over 20.7 million households. The program provides financial assistance tailored to family needs, with an average monthly payment of BRL 684.27 (approximately USD $113). While the program was continued under the previous administration as Auxílio Brasil, its recent expansion has been pivotal. Pedro Fernando Nery, an economist and legislative consultant for the Federal Senate, noted that six million Brazilians escaped extreme poverty over the last five years, despite pandemic-related headwinds.
Nery highlighted that the extreme poverty rate has fallen by 40% compared to pre-pandemic levels. He identified the combination of a robust labor market and the significant post-emergency expansion of Bolsa Família as key drivers of this progress. The program operates on a conditional model, requiring enrolled families to ensure children attend school and maintain regular health checkups, including up-to-date vaccinations, to mitigate human capital losses.
The labor market’s recovery has reinforced the impact of social transfers. IBGE data released in late November showed the unemployment rate dropping to 6.2%, the lowest level since the historical series began in 2012. Economist Raul Krauser explained that Bolsa Família creates an economic multiplier effect, as funds circulate locally among small businesses, stimulating job creation. “When you enhance people’s purchasing power, you stimulate the local economy,” Krauser said. “This triggers a range of services and activities, driving job creation and poverty reduction.”
The current success builds upon earlier interventions during the pandemic. In 2020, the World Bank approved a US$1 billion loan to support the expansion of Bolsa Família, aiming to cover an additional 3 million individuals in poor households, including women, children, and indigenous peoples. At the time, the Brazilian government cited the need to protect vulnerable groups as temporary emergency aid measures were set to expire. The 2023 data suggests that the transition from emergency aid to structured social assistance, coupled with labor market recovery, has yielded sustained long-term results in reducing inequality.
