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Latin America: Extreme poverty reached its highest level in 25 years

Latin America: Extreme poverty reached its highest level in 25 years

Impact. Inflation and the global slowdown in 2022 hit neighboring economies hard, including Peru. Likewise, ECLAC warns that these figures will not drop in 2023.

The countries of the Latin American continent begin 2023 with complicated and uncertain forecasts, after leaving a year marked by a strong inflation and a global crisis caused by the war between Ukraine and Russia, as well as the collapse in the economy of world powers such as the US, Europe and China. In addition, another problem they face is the high level of social and economic inequality in the region.

inequalities

According to the report of the Economic Commission for Latin America and the Caribbean (ECLAC), at the end of 2022, poverty in the region stood at 32.1%, which is equivalent to 201 million people in this situation. Likewise, extreme poverty reached 82 million citizens (13.1%). The dire figures show that around 15 million additional people are in a vulnerable situation compared to the pre-pandemic era. Meanwhile, those who are located in extreme poverty would reach 12 million, a higher number than that registered in 2019.

“The projected levels of poverty extreme in 2022 represent a setback of a quarter of a century for the region”, warns the study.
For his part, Federico Arnillas, president of the Roundtable for the Fight against Poverty, highlights that “the problem in Latin America is inequalities, which cause the loss of social cohesion. This causes our society to be more fragmented and , therefore, potentially more conflictive”.

Poverty will not be reduced

In this line, José Salazar-Xirinachs, representative of ECLAC, indicated that poverty will not decrease this 2023 in Latin America. This is due to low economic growth and the complex situation in the region due to social protests. “Extreme polarization, constitutional crises and very frequent changes of governments always end up spilling over into the economic field,” he told EFE in the framework of the World Economic Forum in Davos.

It should be noted that the Latin American country with the most poverty is Colombia —according to ECLAC estimates for 2022— with 36.3%, followed by Bolivia (30.3%), Ecuador (29.4%), Argentina (29.6%), Peru (25.9%), Paraguay (23%), Brazil (22.5%), Chile (8.9%) and Uruguay (4%).

stagnant.  The poverty rate in Peru would be 25.9%.  Photo: diffusion

stagnant. The poverty rate in Peru would be 25.9%. Photo: diffusion

Peru in the middle of the table

Regarding the region, Peru is in the middle of the list. Recently, the owner of the Ministry of Economy and Finance (MEF), Alex Contreras, stated that poverty during 2022 would not have had any reduction compared to 2021, where it stood at 25.9%, according to figures from the INEI.

Thus, more than 8 million Peruvians remain in a situation of vulnerability. The reasons would be the strong inflation, which closed last year at 8.46% –the highest in 26 years– and the low progress of the national economy. However, Arnillas estimated that this percentage will probably have risen in 2022 and reach 27% or 28%.

World Bank projects low growth in Latin America

The world Bank estimated that the economies of Latin America and the Caribbean will grow 1.3% this 2023 and by 2024 at 2.4%.

“This lower growth is attributed to the fight against inflation, which has been very high throughout the world, but particularly in the main countries of the region such as Brazil and Argentina, which were forced to adopt a restrictive monetary policy with an increase in interest rates,” Luis Miguel Castilla, former MEF minister, told this outlet. In addition, Latin America was hard hit by the pandemic, and although in 2021 it recovered and grew around 7%, during 2022 the levels reached barely 3% and for this year the projections are less favorable.

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Infographic – The Republic

Infographic - The Republic

Infographic – The Republic

Infographic - The Republic

Infographic – The Republic

Source: Larepublica

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