Copacabana Beach

Slumbering giant

Brazil’s average household wealth tripled between 2000 and 2014, rising from USD 7,900 per adult to USD 23,400. While exchange rate changes caused fluctuations, including sizeable drops in 2008 and 2012, the overall rise over the last 14 years is very similar whether it is measured at current or constant exchange rates. Current wealth is now well above the level reached before the global financial crisis in 2007, based on either exchange rate calculation, having shown an average annual growth rate of 8.4%. However, growth has slowed in recent years and averaged just 1% in domestic currency from 2011 to 2014. In USD terms, wealth per adult has fallen by 14% since 2011.

Financial assets make up 37.4% of household gross wealth in mid-2014 according to our estimates, which reflects a fairly healthy financial sector and greater confidence on the part of investors than in earlier years when inflation ran very high. The 12 months to mid-2014 also saw a moderate rise in the stock market. Still, many Brazilians retain an attachment to real assets, particularly in the form of land, as a hedge against possible future inflation. Household liabilities are 19% of gross assets, again reflecting the operation of a well-developed financial sector.

Similar to a number of other Latin American countries, Brazil has more people in the USD 10,000–100,000 range relative to the rest of the world, but fewer numbers in each of the other ranges. This may give a misleading impression that inequality is lower than average. Actually, overall inequality is relatively high, as shown by the Gini coefficient value of 82% and by the fact that Brazil has 225,000 millionaires and 296,000 adults in the top 1% of global wealth holders. The relatively high level of inequality partly reflects high income inequality, which is in turn related to the uneven standard of education across the population and the lingering divide between the formal and informal sectors of the economy.



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