Due to inflation, the fall in activity and economic imbalances, Poverty in Argentina will increase from 13% in 2023 to 17% in 2024an increase of 4 percentage points, according to the World Bank. The projection was prepared based on the measurement with the international poverty line of US$ 6.85 per day (purchasing power parity of 2017), a standard that is lower than the poverty line used for official measurement in Argentina. .
“Unlike the countries in the region, Argentina is the only one that shows an increase in poverty between 2012 and 2022. At the beginning of the period the levels are relatively low, but harmonized by 2023 it was 13% and 17% in 2024 based on the international poverty line, which is more equivalent to the indigence line,” Lourdes explained. Rodríguez Chamussy, senior economist at the World Bank.
According to INDEC, poverty affected 52.9% of people in the first half of 2024, a jump of 11 points compared to the second half of 2023. And indigence reached 18.1%.
This happened despite the fact that the average benefit of the AUH as a proportion of the cost of the food basket increased from 35 to 60% since the end of last year and as a proportion of the total basic basket it increased from 18 to almost 30%, according to calculations by the World Bank based on data from ANSeS and INDEC.
The increase in poverty is in line with the projection that the organization released last week regarding Argentina’s growth in 2024. According to the organization, A 3.5% drop in GDP is expected, the most pronounced in the region after Haiti (4.2% of GDP).
The World Bank shared its poverty estimate this Thursday within the framework of its diagnosis titled ““The Poverty Traps in Argentina” which analyzes poverty trends in Argentina and its determinants between 2013 and 2023. “Argentina spent a third of the time decreasingno country spent so much time like this,” explained Chamussy, the author of the report.
Besides, The increase in food prices frequently exceeded general inflation, affecting the most vulnerable sectors. While the first indicator went from 25% in January 2018 to 287% in April 2024, food rose faster from April 2023 and reached almost 300% at the beginning of 2024. “Inflation is a big driver of poverty“said the report.
“Argentina in 2024 will present two opposing trends in relation to its poverty numbers. On the one hand, and as a result of the need to accommodate macroeconomic variables, There was an increase in poverty in the first months of the year, reaching 53% in the first semester. On the other hand, estimates based on aggregate data show that this trend is being reversed due to the drop in inflation and the incipient recovery of real wages,” explained Chamussy, the author of the report.
According to the study, the economy presents persistent poverty with a growing trend in recent years, despite the increase in resources to mitigate it. “Argentina presents the paradoxical case of persistent poverty even when it has good programs and public policies aimed at reducing it,” said Chamussy.
According to the report, Poverty – measured with the national methodology – has always been above 25% of the urban population in the last four decades. “This pattern occurs in a context in which public spending multiplied 2.6 times, reaching the highest levels among countries in the middle and upper-middle income category,” indicated the World Bank.
“Between 2016 and 2023, the most recent period with comparable information, average real income per capita fell by 41%. Labor income has reduced in importance, going from contributing 64% of the total income of the poorest decile in 2016 to 58% in 2023. On the other hand, public transfers went from representing 19% of total household income among the poorest. poor in 2016 to represent 27% in 2023,” the entity indicated.
However, Chamussy warned that “Homelessness would be 30% higher without the AUH“.
The report highlights that The contraction of labor income explains 60% of the increase in the poverty rate between 2016 and 2023. “Labor income is the most important component of household income for all population groups; however, among the low and middle segments it mostly comes from vulnerable sources, such as informal or self-employment.”
Other “traps”, according to the World Bank, are the generational and regional inequalityfor which poverty is higher among children and adolescents and spending on non-contributory transfers aimed at older people is 3 times greater than that directed at children and adolescents.
The third factor is the labor informality for which a large part of the population works without contracts or social benefits, precarious and poorly paid. “For the poorest, labor income went from contributing 64% of total income in 2016 to 58% in 2023,” the report noted.
And finally, it points out as a determinant of poverty the impact of climate change: “Extreme climate events, such as droughts and floods, disproportionately affect the most vulnerable populations,” he concluded.