The Latin American decade – the recent commodities-boom fueled years of growth – may be winding down. And with it is the decline in the region’s poverty that prosperity brought. This year, 68 million Latin Americans (11.5% of the region’s inhabitants) are considered to be in extreme poverty defined as living on less than $2.50 a day. That is a rise from 11.3% in 2012, according to a newly published report from the Economic Commission for Latin America and the Caribbean (ECLAC), Social Panorama of Latin America 2013. The total number of Latin American living in poverty is 164 million, or more than one in four of the region’s population.
Poverty reduction is slowing even as income inequality widens – one of the regions ever-lasting issues. ECLAC, which is a U.N. agency, says that that is due to rising food costs that outpace general inflation as well as weaker economic growth. ECLAC calls “on countries to carry out structural economic changes to achieve sustained growth with greater equality.” On average, 20% of the households with the lowest incomes in the region get just 5% of a country’s total income. The wealthiest 20% of households get 47%, it says.
Poverty and indigence in Latin America
Venezuela, currently undergoing huge economic problems with record inflation, saw the largest drop in its poverty rate falling 5.6 percentage points to 23.9% this year. Mexico, praised in recent years for its economic growth, was the only country in which poverty indicators rose, albeit marginally (poverty up to 37.1% from 36.3% and indigence up to 14.2% from 13.3%).
In 2011, more people were part of the middle class in Latin America than were living in poverty. The rise of Latin America’s middle class was seen as a significant social achievement. But ECLAC’s study underlines how fragile those gains remain. A recent report by the World Bank warned the a 40% of Latin Americans are at risk of falling from the middle class back into poverty in the event of economic shocks or due to the effects of climate change on the region. Even without cataclysmic change, a large number of marginal middle class Latin Americans will be vulnerable. The International Monetary Fund’s most recent economic outlook downgraded its 2013 growth estimate for Latin America’s combined economies to 2.7% from 3.4%.
The words of the late Nelson Mandela, the South African leader who died Dec 5, are particularly timely and germane to the region: “Overcoming poverty is not a task of charity, it is an act of justice. Like slavery and apartheid, poverty is not natural. It is man-made and it can be overcome and eradicated by the actions of human beings. Sometimes it falls on a generation to be great. You can be that great generation. Let your greatness blossom.”