More than 9 million Peruvians will remain in poverty until 2028

The pandemic left 30.1% of Peruvians in poverty — 9.8 million people, considering that there are more than 33 million of us — and the pace at which our economy is developing is not enough to reduce this indicator.

By 2028, 27.8% of the population would be in monetary povertyaccording to BBVA Research, after 2023, where GDP approaches 0% due to factors such as sociopolitical conflict, droughts and El Niño – which impact food prices – and high credit costs due to rising rates. of the Central Reserve Bank of Peru (BCRP) to mitigate inflation, mainly.

Furthermore, according to the Fiscal Council (CF), Peru’s potential economic growth towards 2027 is 2.6%, half a point below the range of 3.0% and 3.3% expected by the Ministry of Economy and Finance. (MEF) in the long term. “It is very little to improve socioeconomic indicators,” said Alonso Segura, member of the CF.

This rate of 27.8% for 2028 would be similar to that of 2011, and with the demographic expansion to 35.7 million Peruvians that the INEI By 2030, there would be 9.7 million compatriots who will not be able to cover their basic needs.

“Inflation has been the main factor in the deterioration of living conditions and we must not forget that. Knowing that a fairly severe El Niño phenomenon is coming, not only will it affect farmers, but also everyone who lives around the agricultural value chain and consumers due to the drop in real income and spending,” he told La República, IRD researcher Javier Herrera.

The expert warns that in this scenario employment is discouraged because “the problem is the interest rate,” which affects investment and credit, particularly for small and medium-sized businesses due to the increase in the cost of capital.

Here, it recommends that the Government expand the social programs such as Juntos or Contigo both in its frequency and in the universe of affiliates, since it is restrictive to condition them only for homes with infants or older adults.

Model failure

One of the main virtues of the Peruvian economic model established three decades ago is the fight against poverty, because it reduced it from 60% to 20% until a year before the coronavirus – although since 2014 it stagnated “due to political factors”, according to criteria by the expert Federico Arnillas.

Economist Armando Mendoza maintains that the rise in poverty, together with the contraction of income and loss of job quality, illustrate the failure of the “trickle-down” model established in the nineties.

“The evidence shows that the privileged sectors accumulate their privileges at the expense of the rest of the society.” economy. Inequality increased. This trickle-down theory, concentrating resources, facilities and incentives at the top so that it trickles down to the most excluded, does not work in Peru or in the world. He dripping “It arrives late, badly and never,” Mendoza pointed out, giving as an example the increase in demand for raw materials in the last decade, but without reducing the gaps.

How many will be poor at the end of this year?

We closed 2022 with 9.1 million Peruvians in monetary poverty, and for this year, the World Bank predicts that it will rise to 30.5%, covering one in three compatriots.

Herrera explains that, simulating an inflation rate of 4% and the GDP approaching 0%, 29.8% of the population would be poor (9.8 million).

Of these, almost 2 million would be extremely poor, since 259,000 poor people will be reached by this threshold (in 2022 1.6 million are extreme poor), and of the 11 million vulnerable people, 754,000 will fall into poverty.

According to the Private Competitiveness Council, Poverty would fall to pre-pandemic level in 2053 if we continue growing at rates of 2% in GDP.

The word

Javier Herrera, IRD researcher

“Inflation has been the main factor in the deterioration of living conditions. Even with stagnation, poverty can be reduced if internal demand is boosted, but the problem is the interest rate.”