Latin America poverty hits 33-year low but inequality prevails, UN report says

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By Fabian Cambero

SANTIAGO (Reuters) - Latin American poverty levels in 2023 fell to a 33-year low, led by progress in Brazil, the United Nations' Economic Commission for Latin America and the Caribbean (ECLAC) said in a report on Tuesday, even as severe inequality persists in the region.

ECLAC said Latin America is marked by high inequality, limited social mobility, and weak social cohesion, underpinned by inadequate social policies and weak protection systems.

The ECLAC defines poverty as affecting those who do not have sufficient income to cover their basic needs, while extreme poverty includes people who do not have enough income to buy a basic food basket.

WHY IT'S IMPORTANT

More than 170 million people in the region are affected by poverty, particularly in Haiti, Nicaragua, and Honduras.

Despite declining poverty rates, income inequality is high, according to the ECLAC report.

BY THE NUMBERS

Poverty in Latin America decreased in 2023 to affect 27.3% of the population, down 1.5 percentage points from the year before and more than a 5-point drop from 2020, when economies were severely impacted by the COVID-19 pandemic, ECLAC reported.

Extreme poverty in the region still affected 10.6% of the region's population.

Excluding Brazil, Latam's poverty ratio would have stood at 28.4%, closer to the 2022 figure.

KEY QUOTES

"The decrease in poverty at a regional level in 2023 is mainly explained by its incidence in Brazil, a country that contributed to about 80% of the observed reduction in the regional average," the report stated.

Strengthening social protection systems is the key to adopting an integrated approach that can help reduce poverty and the various causes of inequality, and boost social cohesion, the report concluded.

CONTEXT

Counterbalancing the progress made in Brazil, poverty increased in Honduras and Peru, which faced lack of financing, higher instability and civil unrest in 2023.

FUTURE

The International Monetary Fund forecasts a 2.1% GDP increase for Latin American economies in 2024, which could potentially aid in further reducing poverty.

ECLAC expects poverty to continue falling to 26.8% this year, while extreme poverty will be at 10.4%.

Specifically in Brazil, which is leading in poverty reduction, the government forecasts a 3.2% GDP growth for this year.

(Reporting by Fabian Andres Cambero; Writing by Aida Pelaez-Fernandez; Editing by Nicholas Yong)

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