Sharp rise in poverty rate highlights economic challenges in Argentina

According to the latest income distribution report by INDEC, there has been a significant and sustained decline in real incomes, leading to a substantial rise in poverty levels in Argentina.

The country’s economy has been stagnant since August of the previous year, and the value of wages is diminishing.

During the last year of the fourth Kirchnerist experiment in the country, Argentina is facing an intensifying economic and social crisis.

NDEC’s Income Distribution report confirms a significant deterioration in living conditions and real incomes of the population.

The report suggests that the poverty rate may have reached 40.3% by the end of the first quarter of this year, in line with estimates from the Universidad Torcuato Di Tella and Martín Rozada, which projected a poverty rate of approximately 40.6% for the same period.

Between the first quarters of 2022 and 2023, approximately 2.7 million people fell below the poverty line, unable to afford even a basic food basket.

It is important to note that this figure only accounts for a survey conducted in 31 urban areas, with a reference population of 29 million people.

Therefore, the actual number of individuals experiencing poverty within the entire population of 46 million is likely higher.

Furthermore, the situation continues to deteriorate month after month.

Economist Martín Rozada’s poverty estimates predict that the rate could reach 43% by the end of June, marking the highest figure recorded during the administration of Alberto Fernández and Cristina Kirchner, surpassing even the levels seen during the 2020 pandemic.

This represents an increase of 7.5 percentage points from the 35.5% poverty rate inherited from the Macri administration in December 2019.

Under the current Kirchnerist model, the surge in poverty exceeds the increase experienced during Fernando De la Rúa’s administration, which saw a rise of 6.8 percentage points according to comparable data from CEDLAS.

In fact, the current poverty rate, using a comparable methodology, is already at levels similar to those in 2001, with a difference of only two percentage points between the first and second half of that year (45.3% and 45.6%).

The primary factor contributing to poverty is inflation and the consistent erosion of real wages, particularly in the informal private sector.

This sector has witnessed a staggering 22 percentage point decrease in purchasing power since December 2019.

Inflation disproportionately affects lower-income groups who lack access to foreign currency savings or peso-denominated instruments such as fixed-term deposits or shares.