Increasing poverty in Latin America takes a breather thanks to improving economic dynamics
After having fallen for over ten years, the rates of poverty and extreme poverty increased again in a large part of Latin America in 2015 and 2016. But in 2017, thanks to the greater economic dynamism, the indices remained stable, according to the 2017 Social Panorama Report on Latin America, published by the Economic Commission for Latin America and the Caribbean (ECLAC).
Between 2000 and 2014, the middle class in Latin America nearly doubled to reach 186 million people. This marked a 35% increase while "poverty managed to decrease at a rate of 11%," according to Héctor Salazar, Social Sector Manager of the IDB. By the end of the period, poverty had been reduced to 28.5% of the population of Latin America. However, the economic recession that affected several countries in recent years led to poverty in the region rising to 29.8% in 2015 and 30.7% in 2016, amounting to some 186 million people. Extreme poverty was also affected, increasing from 8.2% in 2014 to a tenth of the regional population in 2016.
Despite the poor data of recent years, the balance in the medium term remains positive; between 2002 and 2016 there was a 15 point reduction in poverty, according to Alicia Bárcena, the Executive Secretary of ECLAC. Throughout the period there was also an improvement in the redistribution of wealth thus reducing income inequality. And while the reduction in inequality has slowed in recent years, between 2002 and 2016 the Gini (where 0 represents absence of inequality and 1 maximum inequality) fell from 0.538 to 0.467.
"Recent experience indicates that the increase in income in low-income households has been essential to the reduction of both poverty and income inequality," says Bárcena. This is partly due to the distributive and redistributive policies that many Latin America countries have carried out, such as tax reforms, increases in the minimum wage and the expansion of social security.
In the context of a region with a quickly-aging population, pension systems reforms were essential to expanding access to social security. Between 2000 and 2014, according to the ECLAC report, the economically-active population participating in one of the region’s pension systems increased from 36.9% to 47.8%. This improvement is associated with the improvement in the labor markets, especially with respect to "the decrease in unemployment and the increase in the levels of employment, formalization and income from wages." In addition, the proportion of people receiving some type of pension increased from 53.6% to 70.8%, which especially affected people with lower incomes and those living in rural areas due to the expansion of non-contributory pensions.
While there were considerable improvements throughout the period, in 2015 29% of the retirement age population did not receive any type of pension and a large portion of workers did not have access to social security, especially among those with less access to education and especially people living in rural areas. In addition, according to the report, poverty and extreme poverty in Latin America are more likely to affect younger people and women, and especially impact children who are three times more likely to suffer extreme poverty than older adults.
*Guest blog post from Latinoamerica21
Jeronimo Giorgi, a Uruguayan journalist dedicated to international issues, is pursuing a master's degree in Latin American Studies. He has collaborated with various media outlets in Latin America and Europe, and has received distinctions such as the Premio Rey de España for Journalism.
Latinoamerica21 is a blog about current economic, political and social topics in Latin America that is currently published within the newspaper El Observador de Uruguay and Pagina Siete in Bolivia, and will soon be published in other media outlets within the region. The original version of this blog post is available in Spanish: América Latina reduce las trabas al comercio internacional.
*Guest blog posts do not reflect the views of FocusEconomics.
5-year economic forecasts on 30+ economic indicators for 127 countries & 33 commodities.
Date: December 28, 2017
TagsHealthcare Turkey Agricultural Commodities United States Bitcoin Brazil Investment Venezuela Consensus Forecast Trade Mexico Italy Unemployment rate Iran UK MENA Base Metals Commodities Russia Africa Asia France Colombia Tunisia Portugal Eastern Europe Gold European Union Emerging Markets United Kingdom G7 IMF Exchange Rate USA precious metals OPEC Greece Oil TPP Cryptocurrency Canada Housing Market Forex Latin America Ukraine Commodities oil prices Germany Sub-Saharan Africa Precious Metals Commodities Spain Company News India Nordic Economies China Vietnam Argentina Economic Growth (GDP) Euro Area Inflation South Africa Banking Sector Major Economies Australia Brexit Infographic Japan Energy Commodities
18 hours ago
20 hours ago
20 hours ago
Global commodity prices set to increase 6.9% in Q4 2018 from the same period in 2017, mainly due to higher energy a… https://t.co/dVa75QrBr4
21 hours ago
Start getting prepared for iMONEY EXPO 2018! Registration available at https://t.co/K3CyVVbeOv
21 hours ago
- How can Latin America’s business environment benefit from technological change?
- Mexico: A look at the past, present and future as elections yield AMLO victory
- Latin America moves toward increased integration as U.S. protectionism grows
- Italy’s New Populist Government and the Eurozone: Prelude to a Crisis?
- How can Latin America increase productivity without affecting the quality of employment?
- How will Saudi Arabia's economy benefit from lifting the women's driving ban?
- Which countries are the most prepared for the upcoming digital revolution?
- India Under Pressure from the U.S. on Trade Policy
- The Story of Steel
- Latin America is the World Leader in eCommerce Growth Despite Serious Challenges
- What the TPP means for trade in Latin America
- Elections in Russia: Analysis and Implications
- 2018 & 2019 Economic Outlook for the Top Oil Producing Countries
- Nearly a Third of Latin Americans Have No Right to a Pension
- A Look at Healthcare Models Around the World
- The Poorest Countries in the World
- Newly-elected Chilean President Sebastian Piñera faces a myriad of challenges - economic and otherwise
- The Economic Effects of Trade Protectionism
- Regional Disparity: The Dark Side of Inequality in Latin America
- Coal: The story of the world's most abundant fossil fuel
- Gold: The Most Precious of Metals (Part 3)
- Venezuela's Electoral Conundrum
- Trump's 1st Year: 95 Analysts Surveyed on U.S. Economy
- The Latest on China and What's in Store for 2018
- An in-depth look at the Eurozone’s booming economy and the challenges that lurk in the shadows
- China’s growing influence on the Latin American economy
- Top Economics & Finance Blogs of 2018
- How Latin America emerged from recession in 2017
- Is this the beginning of the end for Bitcoin?
- Risks and Opportunities for 2018 - Daniel Lacalle
- Emerging Markets 2018 Economic Outlook
- The role of FDI in Vietnam’s socio-economic development
- Increasing poverty in Latin America takes a breather thanks to improving economic dynamics
- What will be the most miserable economies in 2018?
- The World's Top 10 Largest Economies
- Is Spain doing enough to address its high youth unemployment rate?
- Has Latin America gone far enough in reducing barriers to international trade?
- Commodities Outlook: Oil, Natural Gas, Coal, Lead & Tin
- 21 experts tell us what the future looks like for cryptocurrencies and blockchain
- Turkish lira plummets to all-time low on Erdogan’s monetary feud and tense U.S.-Turkey relations
- Copper: The first metal mastered by man
- Nigerian Economy Still Treading Water Thanks to Oil Sector
- The Mercosur-EU Free Trade Agreement: Obstacles & Opportunities
- Elections in Chile: What the results could mean for the economy
- QE’s Untold Story: A Chart That Fed Correspondents Need To Investigate
- Holland’s fragile one-seat majority government targets economic growth at the expense of fiscal sustainability
- South Africa: Economy at a tipping point?
- Latin American Commodities: What’s behind the increase in demand and prices?
- Is the UK really "shackled to a corpse"?
- Spain-Catalonia: 7 economic experts weigh in on how the situation will affect the outlook
- How well is Spain's labor market doing since the crisis?
- Which countries will have the highest and lowest inflation in 2017?
- How vulnerable is Latin America to economic crises today?
- Iron ore facts and common questions answered
- The bulging economic costs of obesity
- How much investment is needed to salvage Latin America’s crumbling infrastructure?
- A Look at the Potential Impact of Brexit on the Dutch Economy
- Emerging Markets Are Kicking Into Higher Gear In 2017
- Why is foreign direct investment in Latin America falling again?
- Are Central Banks Nationalising the Economy?
- Bounty or burden? The impact of refugees on European economies is far from clear
- What’s the future of U.S.-Latin America trade relations?
- Taxes or cutbacks? Latin America's challenge of sustaining spending without causing debt to skyrocket
- Are uranium prices making a comeback?
- Taxing the Economy: Achieving a Delicate Balance
- How will Latin America’s upcoming lengthy election cycle affect the reform agenda and credit ratings?
- How will emerging market economies perform in 2017?
- Chilean Economy in Focus: Interview with Senior Economist of the Chamber of Commerce of Santiago
- CEOs Rank Top Economies for Growth Opportunities
- The Mobile Ecosystem & Latin America's Economy
- Prospects and Challenges for the Global Economy: Interview with Tim Cooper from BMI Research
- How will the Fed reduce its balance sheet & and how will the ECB end QE? - 19 economic experts weigh in
- Thoughts on "unwinding" QE from Frances Coppola
- The Fed and ECB at a crossroads: Unwinding QE
- Spain: The economy that continues to silence the critics
- Latin America: The Most Unequal Region in the World
- The History of OPEC: Has it been a Success?
- FocusEconomics Announces 2017 Analyst Forecast Awards Winners
- Latin America’s rising unemployment bucks nearly decade long trend
- Escape from the Central Bank Trap by Daniel Lacalle
- China's economic rebalancing act: What to look out for in 2017
- Driving Growth in Latin America: Challenges & Priorities
- Is the Global Economy Rebalancing?
- Commodity exporters face challenging times
- Recent Global Events Facilitate Mercosur-Pacific Alliance
- 23 economic experts weigh in: Why is productivity growth so low?
- Mexico's outlook as Trump nears 100-day mark
- Interview with Oxford Economics Senior Economist on implications of the possible outcomes of the French Presidential Election
- The anxiety of the small saver in a world of negative interest rates
- Brexit negotiations. Between Uncertainty and Urgency
- An Economic History of the EU from El Blog Salmón
- Baby Boomin': Implications of high population growth in Latin America
- Survey of International Economists Predicts a Le Pen Defeat in French Elections, Says Macron has Best Economic Plan
- Spain in a global context: developed economy with some challenges
- How much is crime costing Latin America?
- Predictions & Estimates from Economist Daniel Lacalle
- What economy will the new Dutch government inherit?
- “The data is not a true reflection of reality in India” Interview with Société Générale India Economist
- What are the prospects for Emerging Economies in 2017?
- What to expect in Asia for 2017
- Top Economics & Finance Blogs of 2017
- 4 Key European Elections That Will Impact the Economy in 2017
- Latam to Resume Moderate Growth in 2017 but Important Risks Plague Outlook
- How are security concerns and political chaos affecting Turkey’s economy?
- Global growth to edge up in 2017
- Set to breach targets again? Debt and deficit outlooks for Southern European Eurozone countries in 2016 & 2017
- What does Donald Trump mean for the U.S. economy?
- How will emerging markets perform in 2017?
- The economic impact of a break in U.S.-Philippines ties
- Trump election: Base metals surge due to infrastructure plan
- 5 updates on the Venezuelan economic crisis
- Canada: When your neighbor’s house is on fire…
- Short-term pain before long-term gain? A look at French labor reform and economic growth
- Asia: Unremarkable growth & unfulfilled promises?
- How India's latest monsoon is affecting the economy
- Innovation in Latin America: Potential Goes Untapped Due to Weak Economic Conditions
- Russian economy update in wake of OPEC deal announcement
- The Wisdom of the Crowds and the Consensus Forecast
- Can the peso predict the U.S. election results?
- There's no end in sight to the Venezuela crisis
- A Look at the European Union Political Calendar
- Survey of international economists shows uncertainty surrounding elections damaging U.S. growth prospects
- FocusEconomics partners with leading online statistics provider Statista
- China: Recent postive economic data may be papering over the cracks
- Sub-Saharan Africa's 2016 & 2017 growth rates
- The Italian Dilemma: Weak banks pose risk to already faltering domestic demand
- How much money do migrants from Latin America send home?
- The U.S.' (Not So) Mysterious Case of the Missing Men
- What to expect from the G20 economies by 2020
- The Pain in Spain: Robust GDP growth cannot mask the persistent structural deficit