Brazil recorded its best results in income, inequality, and poverty since this time series began in 1995, according to a technical note from the Institute for Applied Economic Research (Ipea). The study was released this Tuesday (Nov. 25) with data from the Brazilian government’s statistics agency, IBGE.

Over 30 years, per capita household income grew by about 70 percent, the Gini coefficient fell by nearly 18 percent, and the extreme poverty rate dropped from 25 percent to less than 5 percent.

Progress was uneven, concentrated between 2003 and 2014, and then resumed strongly between 2021 and 2024. After a prolonged cycle of crises between 2014 and 2021 – marked by recession, slow recovery, and the severe impact of the pandemic – per capita income reached its lowest level in a decade.

The trajectory changed from 2021 onwards: in three consecutive years, average income grew by more than 25 percent in real terms, accompanied by a significant drop in inequality.

“The results show that it is possible to intensely reduce poverty and inequality, but that these movements can also be interrupted or even reversed by various factors. And that it is important to combine different means to achieve these fundamental national objectives,” highlighted Marcos Dantas Hecksher, one of the authors of the study.

Researchers attribute the recent improvement to a booming labor market and the expansion of income transfers, both responsible for almost half of the reduction in inequality and the fall in extreme poverty between 2021 and 2024.

Programs such as Bolsa Família income transfer program, Benefício de Prestação Continuada (Continuous Cash Benefit - BPC), Auxílio Brasil (Brazil Aid), and Auxílio Emergencial (Emergency Aid) became more effective after 2020.

However, the impact of transfers weakened in 2023 and 2024 with the end of the expansion cycle, while the labor market continued to exert a strong influence on social indicators.

“Inequalities need to be combated through all public policies - not only through better targeting of social spending to the poorest, but also through a fairer distribution of taxes,” said Hecksher.

In 2024, the country recorded the lowest poverty levels in the series, yet 4.8 percent of the population lived below the extreme poverty line (USD 3 per day) and 26.8 percent below the poverty line (USD 8.30 per day).

More than 60 percent of the reduction in extreme poverty between 2021 and 2024 resulted from improved income distribution, according to the study’s breakdown.

The technical note points out that the progress observed in the post-pandemic period is likely to lose momentum with the end of the expansion of social welfare policies, making the labor market even more decisive in the coming years.

The authors warn that household surveys tend to underestimate very high incomes and some social transfers, requiring caution when interpreting the results.

The document concludes that the recent period represents an important structural change: after years of stagnation or regression, income, inequality, and poverty indicators have all improved simultaneously and rapidly.