More than 25% of the population of Latin America is poor

The area comprising Latin America and the Caribbean is one of the areas most affected by poverty globally, as shown by figures from international organizations.

Data from the World Bank estimate that in 2022 around 66 million people will end the year living in extreme poverty, equivalent to 11.2% of the population of the countries surveyed by the entity.

However, if we take the total poverty figure, which includes indigence, we can see that by the end of this year, some 170 million people (28.8%) of the 590 million people living in the territories analyzed will be living in extreme poverty.

According to ECLAC, the figure is 33%.

And there is a fact that aggravates the situation: the above figures do not include Venezuela, a country that is going through a severe humanitarian crisis and could add an even more worrying number.

Without official data, it is difficult to determine how many of the 28.44 million people living in Venezuela are poor.

However, private studies allow us to survey the situation and have the pulse of the gravity of the situation.

Among them is the Survey of Living Conditions (Encovi) of the Andrés Bello Catholic University (UCAB), which indicates that poverty in Venezuela stood at 94.5% in 2021. And extreme poverty stood at 76.6%.

In any case, Luis Pedro España, a researcher at the university, told Bloomberg Línea a few days ago that the total poverty figure may show a sharp decline in 2022 to an area of 70%.

POVERTY IN THE REGION

The Latin American and Caribbean countries for which the World Bank has poverty figures are Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, and Uruguay.

In addition to Venezuela, most Caribbean countries do not provide updated figures.

The international organization carries out its poverty survey based on a unit of measurement called Purchasing Power Parity (PPP), which assumes a U.S. dollar has the same purchasing power in all countries. Since 2022, PPP at 2017 values has been used as a reference.

Based on this, data from Bloomberg Linea shows that by 2022, it is estimated that 66 million people will live on less than US$3.65 PPP per day (extreme poverty), and 170 million people will live on less than US$6.85 PPP per day (poor).

The second figure also encompasses the first.

People in Latin America living on less than US$3.65, according to PPP 2017, and people are living on less than US$6.85 according to PPP 2017.

These figures imply an improvement compared to 2021 since last year; 70 million people were living on less than US$3.65 (according to PPP 2017), and some 177 million people subsisting on less than US$6.85 per day at PPP.

METHODOLOGICAL ANALYSIS

The line used by the World Bank to measure how many people live in the most extreme poverty involves counting those individuals who must subsist on less than US$2.15 a day (at purchasing power parity).

However, a specialist in the field pointed out that the bar for Latin America should be higher, so it was decided to consider extreme poverty as subsistence with the next higher step.

Leopoldo Tornarolli, a senior researcher at the Center for Distributive, Labor and Social Studies (CEDLAS), explained to this media that the current measure of US$2.15 a (2017 PPP) is what at the beginning of this century was called living on “one dollar a day”, while the one that currently stands at US$3.65 PPP per day is equivalent to what at that time was called living on “two dollars a day”.

Having made this first methodological clarification, Tornarolli explained that “for a Latin American country (middle-income region), the US$3.65 PPP line would mark extreme poverty and the US$6.85 PPP line the poverty line”. And he clarified: “The US$2.15 line is thought of as extreme poverty for low-income regions (mainly Africa)”.

It should be noted that Tornarolli’s view is more than authoritative on the matter, as some of the data that the World Bank uses has Cedlas as its source.
Demographic characteristics of the poorest people

While demographic data on those living on less than US$3.65 PPP per day was not available, Bloomberg Linea could access a disaggregation that allows us to put a magnifying glass on those subsisting on less than US$2.15 per day in Latin America.

That is, with the bare minimum, even by the standards of the poorest African countries.

And these are some of the conclusions that can be drawn about the most extreme cases of poverty in Latin America.

Taking 2021 data, 52.7% of people living on less than US$2.15 PPP in Latin America live in urban areas and 47.3% in rural areas.

It means a strong change in trend since until 2019, 47.7% of people in this situation in the region lived in urban territory.

On the other hand, 52.1% of the people living on US$2.15 PPP per day are women, and 47.9% are men.

57.2% of the people living at these levels of indigence are between 15 and 64 years old. 39.4% are between 0 and 14 years old, and 3.4% are over 65.

Of the people with the lowest daily income in the entire region, 45% live in the countries of Central America, Mexico, and Haiti; 38% live in Brazil; 15.9% in the Andean region (Bolivia, Colombia, Ecuador, and Peru) and 1% in the Southern Cone (Argentina, Chile, Paraguay, and Uruguay).

The latter may be because the country with the largest population in the Southern Cone (Argentina) has a universal minimum income for children that allows people in lack to be slightly above the minimum established by the World Bank to define extreme poverty.

In 2019, 5.2% of the population (30 million people) lived on less than US$2.15 PPP per day, and that figure fell to 5% in 2020. How to explain the drop during the confinements by Covid-19?

World Bank sources told Bloomberg Line that “in 2020, the number of people living on less than US$2.15 PPP per day increased in most Latin American and Caribbean countries.

However, Brazil implemented an emergency transfer program that benefited nearly 67 million people and lifted millions of people out of that extreme poverty band.

As a result, the number went down.”

People are living on less than US$2.15 in Latin America, according to PPP 2017.

In 2021 there was a rebound that raised the figure to 5.6%.

POVERTY, ACCORDING TO ECLAC

To have a source that contrasts with the data provided by the World Bank, this portal contacted the Economic Commission for Latin America (ECLAC), an agency under the United Nations Organization responsible for promoting economic and social development in the region.

This entity measures poverty based on the population’s income.

The latest figures published by ECLAC in June 2022 estimate that by this year, extreme poverty will reach 14.5% of the population, and total poverty will reach 33% of the population.

The organization reports the same countries as the World Bank, except Haiti.

Xavier Mancero, head of the Social Statistics Unit of ECLAC’s Statistics Division, detailed to Bloomberg Línea some of the highlights of the organization’s latest report:

• The pandemic generated a significant deterioration in the situation. In 2020, poverty reached 33% of the population, including 13.1% living in extreme poverty.
• The poverty rate was similar to the late 2000s, while extreme poverty rose to levels recorded 20 years earlier.
• The deterioration in the indicators resulted from a sharp drop in labor income, which was partially offset by household income transfers, without which poverty figures would have reached even higher levels.
• On the other hand, poverty projections for this year consider a scenario of low economic growth and rising inflation, especially in food. This context is related to the war in Ukraine, especially the increase in the prices of some foodstuffs.
• ECLAC forecasts that the regional poverty incidence would increase again to 33% (it had fallen to 32.1%), which would return to levels similar to those observed in 2020 during the pandemic. On the other hand, extreme poverty would maintain its upward trend, which has been steadily increasing in recent years.

According to ECLAC’s Social Panorama of Latin America 2021, figures for 2020 show that women between the ages of 25 and 59 have higher poverty rates than men in the same age range in all countries of the region.

“The results regarding the limited economic performance expected for 2022 and a growing inflation generate an adverse context for the living conditions of the population and their possibility of acquiring essential goods and services,” details a recent ECLAC study.

With information from Bloomberg