Recession adds nine million to ranks of Latin American poor

SANTIAGO - The current global crisis will cause the number of poor people in Latin America to rise by nine million to 189 million this year, the UN Economic Commission for Latin America and the Caribbean (ECLAC) said in a report presented here.

In its Social Panorama of Latin America 2009, the Santiago-based institution projected that the region’s poverty rate will rise by 1.1 percent and that extreme poverty will climb by 0.8 percent compared with 2008.

In other words, the number of people below the poverty line will rise from 180 million to 189 million, or 34.1 percent of the region’s population, while the ranks of the destitute will increase to 76 million.

ECLAC’s figures indicate a reversal of the recent trend toward poverty reduction in the region.

The study, presented Thursday, also reveals that poverty in Latin America hits women and children harder than the rest of the population: the poverty rate is 1.7 times higher among those under the age of 15 than among adults and 1.15 times higher among women than men.

The nine million people added to the ranks of the poor is equivalent to almost one-fourth of the 41 million people who had climbed out of poverty in the region between 2002 and 2008, thanks to higher economic growth, an increase in social spending, the demographic dividend and better income distribution, according to the study.

Some countries, such as Mexico for example, are expected to experience higher-than-average increases in poverty and extreme poverty in 2009 due to a sharp decline in the country’s gross domestic product this year and deteriorating employment and salaries.

However, the current crisis will have less of an impact on regional poverty than previous downturns, such as the Mexican peso crisis of 1994-1995, the Asian crisis of 1997-2000 and Argentina’s 2001-02 meltdown.

For now, the purchasing power of salaries has held steady in the region and inflation rates have generally been low.

Income inequality, an endemic problem in Latin America, declined in seven of 18 countries analysed in the 2002-08 period, though it rose in three other countries.

The study noted that regional governments have made great efforts to increase social spending, with public social expenditures per capita rising between 1990 and 2007 from 43 percent to 60 percent of average total public expenditures in Latin America.

–EFE