Several times I have had to translate favela in Brazilian articles. The translations offered by Duolingo are "shanty town" and "slum".
"Shanty town" is not exactly a phrase often heard in English, and "slum" sounds quite harsh. Is slum appropriate?
For the moment I have been leaving favela untranslated, after all we do have a favela article in the English wikipedia.
It is the settlement of poorly built shacks ( http://www.teclasap.com.br/2011/12/03/como-se-diz-favela-em-ingles/)
We use the same word in English.
I usually think of shanty towns as separate from the "rich" town - the poor have been displaced to another location. The dictionary agrees with me:)
Slums can be inside a city. However, like you say, it is harsh word. I've been to Rio and the favelas don't look like the slums in my mind - I think of Victorian England. Perhaps the nice weather tricked me.