Peru’s middle-class shrank by almost half in 2020

RIO DE JANEIRO, BRAZIL – A new study released Tuesday (6) by the Institute of Economics and Business Development (Iedep) of the Lima Chamber of Commerce showed that some 6.3 million Peruvians fell out of the country’s middle-class social group during 2020.

According to the new data, only 24% of Peruvians now belong to that category against 43.6% in 2019 due to the economic impacts of the coronavirus health crisis.

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The Iedep survey specified that 7.9 million people remain within the concept of the middle class, while that group consisted of about 14 million in 2019.

To be classified into that category, individuals need to at least live in four-person households with monthly incomes ranging between S/2,150 and S/10,750 (between US$560 and US$2,795).

The coronavirus crisis has thus dealt a severe blow to the country’s fight against poverty which can also be expressed as a ten-year setback, as the number of people under that line grew to be 30.1% of the population during 2020, according to data from the National Institute of Statistics and Informatics (INEI).

Peru’s middle class had risen from representing 17% of the population in 2004 to 43.6% in 2019.

”In the last 15 years, the Gross Domestic Product (GDP) grew 122.4% and private consumption 126.9%, which allowed more than 9.5 million people to join this population group,” said Iedep in a statement.

The report also indicates that the reduction of the middle class was uneven and that the worst-hit regions were the most dependent on commerce and services, which were affected the most by social isolation measures.

Among the departments with the greatest drops in percentage points are Arequipa (-31.0), Lima (-28.9), Ica (-25.0), Tacna (-23.0), Madre de Dios (-22.7 ), La Libertad (-21.4) and Áncash (-20.2).

On the other hand, the regions with lesser falls were Amazonas (-6.7), Apurímac (-7.7), Ayacucho (-7.4), Cajamarca (-6.2), Huancavelica (-5.1), Loreto (-6.8), Puno (-8.4) and Ucayali (-7.5).

In its study, Iedep also indicated that 69.2% of the Peruvian middle class belongs to the employed economically active population (EAP). However, practically 60% of this group has an informal job, almost half self-employed. Therefore, given the degree of informality, Peru’s middle class remains highly vulnerable without social protection and financing.