The shrinking middle class in Latin America | ECLAC warns of increasing poverty and indigence

“Latin America and the Caribbean represents the 8.4% of the world’s population, but it counts the 21 percent of infections of Covid-19 and 32.5% of deaths for this disease. It is clear that the region needs a common position to face the current crisis and thus evolve towards a renewed international cooperation ”, he declared. Alicia Barcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC) at the extraordinary meeting of the South-South Cooperation Committee.

According to ECLAC, the pandemic has exacerbated economic inequalities between countries. “From the outbreak of the pandemic to March 2021, advanced economies mobilized 16.4% of GDP in additional spending and tax credits and 11.3% of GDP in loans, equity and guarantees, against 10.7% respectively. and 7.2% in emerging markets. . The margin of response in low-income developing countries was even lower, with additional expenditure and tax credits equivalent to 1.7% of GDP and 0.2% of GDP in loans, equity and guarantees ”, indicates the report“ Development in transition. Concept and measure proposal for renewed cooperation in Latin America and the Caribbean “prepared by the agency which depends on the United Nations.

The region in pandemic

From the start of the coronavirus epidemic until June 28, the region records 1,260,000 deaths from the disease. “The impact of the health crisis has massively amplified the structural problems and threatens to further entrench the economic, social and environmental traps which hinder the development of the region”, warns ECLAC.

The report estimates that the region’s GDP fell 6.8% in 2020, its worst economic contraction in more than a century and the deepest of all regions of the developing world. In addition, the crisis has caused an increase in the unemployment rate in the region, from 8.1% in 2019 to 10.5% in 2020.

The loss of jobs and the decline in family income have resulted in increased poverty levels. “The number of people living in poverty increased from 185.5 million to 209 million between 2019 and 2020, with which the regional poverty rate fell from 30.5 to 33.7%. On the other hand, the number of people living in extreme poverty reached 78 million in 2020, 8 million more than before, so that the the extreme poverty rate fell from 11.3 to 12.5%“adds the report.

Downward mobility

Between 2019 and 2020, the population whose income is in the low-income strata increased by 4.7 percentage points, which equates to an increase of an additional 31 million people. In contrast, the middle-income strata contracted by a similar proportion (-4.1 percentage points or 25 million fewer people).

“From a total of 59 million personas alrededor that in 2019 pertenecían to los estratos medios y that in 2020 estarían viviendo un proceso de movilidad económica descente, poco más de 25 million personas lo habrían hecho sin dejar de pertenecer a los estratos medios . While, just over 3 million would have fallen directly into poverty or extreme poverty and the rest would have gone to the low-income stratum that emerged from poverty, ”the report explains.

“Latin America and the Caribbean need a common position to face global asymmetriessuch as access to vaccines, the concentration of wealth, the fight against climate change and the financing of development. International development cooperation must evolve towards a multidimensional concept to face the challenges faced in particular by middle-income countries ”, asked Bárcena.