Poverty in Argentina dropped to 37.3% at the end of 2021 but remains above the 2019 level

RIO DE JANEIRO, BRAZIL – Poverty was significantly reduced in 2021 and dropped to 37.3%, more than expected. However, despite having reacted to the strong monetary issuance, the reopening of bargaining, the freezing of utility tariffs -and other prices, such as part of basic foodstuffs- and the backwardness of the dollar in an electoral semester, poverty is still higher than in 2019, at the end of Mauricio Macri’s government.

The Indec’s Permanent Household Survey (EPH) calculated that, in this way, poverty had a pronounced drop of more than three points since its last measurement, the first half of 2021, when it was 40.6%.

This drop is even greater if calculated on a year-on-year basis. By the end of 2020 – a year marked by the pandemic and the strict and prolonged official quarantines – poverty had risen sharply to 42%. At the end of 2019, when the Juntos por el Cambio administration handed over power to the Frente de Todos, poverty was 35.5%.

The Ministry of Economy reported that in 2021, 920,400 people came out of poverty (the figure reaches 1.5 million projected for the country) compared to the previous semester and 1.2 million compared to the second half of 2020. If the survey is expanded to the whole territory, 16.9 million Argentines are still poor.

Poverty was significantly reduced in 2021 and dropped to 37.3%, more than expected. However, despite having reacted to the strong monetary emission, the reopening of bargaining, the freezing of utility tariffs -and other prices, such as part of basic foodstuffs- and the backwardness of the dollar in an electoral semester, poverty is still higher than in 2019, at the end of Mauricio Macri’s government.

The Indec’s Permanent Household Survey (EPH) calculated that, in this way, poverty had a pronounced decrease of more than three points since its last measurement, the first semester of 2021, when it was 40.6%.

This drop is even greater if calculated on a year-on-year basis. By the end of 2020 – a year marked by the pandemic and the strict and prolonged official quarantines – poverty had risen sharply to 42%. At the end of 2019, when the Juntos por el Cambio administration handed over power to the Frente de Todos, poverty was 35.5%.

However, a significant fact was the drop of indigence to one digit (8.2%). That is an indicator that had been resisting the decline. According to specialists, the significant improvement in the employment rate at the end of last year -especially among informal workers with low salaries- had a greater impact on this number and less on the drop in poverty. In fact, according to some private studies, the number of poor workers has been growing hand in hand with inflation in recent years.

CHILD POVERTY

Poverty among children has declined sharply, despite the fact that it maintains the highest level of poverty. Between 0 and 14 years of age, it dropped to 51.4% compared to 54.3% in the first half of 2021. Child poverty (0 to 17 years) was 51.8%. In the middle of last year, that indicator was at 54.9%.

The recovery of the economy -10.3% last year after the collapse of 2020- and the drop in unemployment -to 7%, the best level since 2016-, fully impacted the poverty figure. However, incomes continue to be a Government’s sleepless night amid the resurgence of inflation since the end of last year. In fact, registered wages beat inflation toe-to-toe in 2021. However, the incomes of informal workers lost by almost ten points. If the measure is made using the annual average, total wages lost against the advance of prices.

Despite the improvement in poverty and indigence data in the second half of last year, the sharp rise in inflation in the first two months of the year has already alerted specialists about a new damage to the social fabric. The government is working on price and income policies to cushion the impact. Analysts and the Government estimate that inflation is running at 65% annualized. This is a figure well above the 50.9% at the end of 2021.

A number that alerted the possibility of poverty expanding again in Argentina is the significant increase of the Basic Food Basket (CBA) in February, which rose 9%, well above the month’s CPI (4.7%). Yesterday, the Universidad Torcuato Di Tella (UTDT) reported that the population’s inflation expectation for the next twelve months was the highest since they started their measurement, in 2006. It was positioned in the order of 53.7%.