New emergency aid won’t provide desired cushion for retail

emergency aid commerce retail
Caixa is the public bank responsible for carrying out the government’s cash-transfer programs. Photo: Joa Souza/Shutterstock

The latest round of emergency aid payments will provide much less of a boost to retail consumption in Brazil, in comparison to the massive support received from the initial aid package in 2020, according to new data by the National Commerce Confederation (CNC).  

The CNC estimates that BRL 12.75 billion of the new benefit payments will be spent on retail, 31.2 percent of the total handouts. In comparison BRL 103.8 billion was spent in stores during the 2020 emergency aid program, some 35.4 percent of the total. This translates into reduced support for the economy as a whole, even having an effect on GDP estimates. 

The reduction is explained by this year’s government aid payments being much smaller than 2020’s, but is also due to the debt level of Brazilian families. 

“Families will have to choose where they spend their money. Therefore, aside from basic consumption, they will prefer to pay off their debts or save the money for a time of need,”  said CNC economist Fabio Bentes, in a press release.