The fastest growing economical segments in Brazil

The last couple of years the growth in the Brazilian middle class, usually referred to as “class C”, has been receiving a lot of attention in the international press. With over 30 million Brazilians having entered the Brazilian middle class C since year 2003, the media attention is hardly surprising.

Despite this phenomenal growth in the C class, the two economical segments that are actually growing fastest in Brazil are the A and B economical segments in Brazil. The following graph illustrates this more in detail.

Growth in Brazilian economical classes A, B and C between year 2003 and 2009

As can be seen in the graph, economical segments A and B in Brazil have seen growth levels of 41% and 38% respectively while the “middle class C” has enjoyed a 34% growth between 2003 and 2009. The middle class C in Brazil has seen the biggest increase measure in millions of people, but the fastest growth levels have indeed been seen in classes A and B.

One can also see from the graph that while the segments A, B and C have seen strong growth, at the same time the lower income segments D and E have seen big reductions. This clearly shows that the Brazilian consumers that have stepped out from the lower income segments are now part of higher income segments.

To illustrate this better, please see the graph below.

Number of Brazilians ( in millions ) in economical segments during 2003 and 2009

By year 2014, Brazil will have 31 million consumers belonging to upper economical classes A and B which is an increase of no less than 18 million people. Also by year 2014, the lower economical classes of D and E will have in total 59 million consumers which is a total reduction of 37 million Brazilians consumers since year 2003!

The economical segments in Brazil are defined as follows: (measured by household income )

Class A: over 9050 BRL
Class B: from 6941 to 9050 BRL
Class C: from 1610 to 6941 BRL
Class D: from 1008 to 1610 BRL
Class E: below 1008 BRL

The impact on real estate in Brazil

Along with higher income levels, demand for goods in Brazil is set to increase well into the foreseeable future. The rapid increase in domestic tourism levels in Brazil is a direct result of higher income levels for the Brazilian consumers. Investors that buy real estate in Brazil should see solid potential for capital growth and rental income for a long time still providing that one chooses the area carefully.

Higher income levels also lead to ever more demanding clients. A good advice is always to buy quality properties in good locations and not to focus too much on trying to buy a property just because it sounds cheap.