RIO DE JANEIRO, BRAZIL – The combined wealth of the Latin American super-rich expanded 41% in 2021, after contracting 19% in the previous year. Compared to the pre-pandemic period (2019), the fortunes of these families accumulated in the last two years an increase of 14%.
This is shown in a recent ECLAC report, with data from Forbes and Credit Suisse, which considers the population of the region with a net worth equal to or greater than US$1 billion.
This personal wealth includes the sum of financial and non-financial assets and excludes debt.
In the first year of the pandemic, the fortunes of Latin America’s super-rich suffered heavy losses, mainly in Brazil and Chile, according to the ECLAC study. And those two countries experienced the biggest increases in their wealth in the second year of the health crisis.
BILLIONAIRES
In Peru, although the six billionaire families that exist achieved some recovery last year (3%), this has been less than in the rest of the countries in the region, with the exception of Venezuela.
In addition, the wealth of the richest in the country reached US$11.4 billion in 2021, an amount even lower by 2% than the amount they accumulated in 2019 (US$11.597 billion).
The study calculated that the total wealth of Peruvian billionaires represents approximately 5% of the country’s GDP in 2021, a percentage that is one of the lowest in the region, including the average (11.1%).
To visualize more clearly the share that the wealth of the super-rich represents with respect to the rest of the population, ECLAC uses data from Credit Suisse as of 2020. Thus, it found that in Peru, billionaires have 1.4% of the total wealth of the population.
In addition, the average wealth of Peruvian billionaires is US$2.6 billion, while the rest of the population has an average wealth of US$16,770, according to the study.
EXTREME WEALTH
“An excessive concentration of wealth can also affect economic growth and increase citizen distrust in elites and institutions,” ECLAC warns. An additional reason to monitor extreme wealth in countries with high inequality is to discern the potential for tax collection.
INCOME INEQUALITY IN THE COUNTRY IS ON THE RISE
As a result of the pandemic, income distribution indicators deteriorated in Latin American countries. In 2020, the downward trend in inequality that had been observed in the region since 2002 came to a halt, according to an ECLAC report.
Peru was one of the countries where the Gini coefficient increased the most. When this indicator is closer to the value 1, it means an increase in inequality. According to the report, Colombia and Peru had the largest drops in average income per person (13% and 21%, respectively) between 2019 and 2020.
Likewise, the largest increases in poverty took place in Argentina, Colombia and Peru. The latter saw one of the sharpest declines in employment. The drop in labor income in low-income households would have implied a reduction in household income of 22%.