Poverty rate remains high in Latin America; Ecuador shows some improvement but not much

More than 32% of Latin Americans live in poverty, with 13% of those living in extreme poverty, the Economic Commission for Latin America and the Caribbean (Cepal) reported Thursday.

“An unprecedented cascade of external shocks has created a slowdown in economic growth, a weak employment recovery and rising inflation and have combined to keep poverty rates at historically high levels,” Cepal’s José Manuel Salazar-Xirinachs said, citing the Covid-19 pandemic and the war in Ukraine as major factors.

Homeless people have established an encampment under a brdige in Santiago, Chile.

He added that poor economic conditions are also leading to social unrest in many countries in the region.

Cepal reported that although there has been a “slight improvement” in employment and income inequality since late 2020, poverty and unemployment rates remain high. “It has not been possible to reverse the impacts of the health crisis, especially in terms of extreme poverty and countries face a silent crisis in education that affects future generations,” Salazar-Xirinachs said. “Even the minor improvement has been slowed by new economic shocks, such as the situation in Ukraine.”

Cepal’s Social Panorama of Latin America and the Caribbean 2022 Report says far too little attention has been paid to the damage suffered by Latin American students due to the closure of schools. “Worldwide, it is estimate that students lost the equivalent of 32% of a school year due to lockdowns and other measures taken to combat the pandemic. In Latin America, however, the figure is 54% and is higher in some countries.”

According to the report, 14% of rural high school students did not return for the 2022 school year in Peru, which suffered the highest dropout rate. Other countries, including Mexico, Panama, Colombia and Ecuador also report high dropout rates. “Due to the economic crisis, most of these students were forced to leave school to help their families and the tragedy is that the vast majority of them will not return to school,” the report said. “These numbers indicate that poverty rates in Latin American will remain stubbornly high far into the future.”

Cepal says another warning sign for the future is the large number of Venezuelan refugees in South American countries. “The economies and social services are especially burdened in Colombia, Ecuador, Peru and Chile. While some of the migrants have gone home, the majority have not and it is uncertain if and when they will.”

Cepal estimates that four million Venezuelans have relocated to other countries.

In Ecuador, the National Institute of Statistics (INEC), reports the poverty rate has dropped slightly in recent months, reducing from 31% to 29% over the past 10 months. It also reports a modest increase in full-time employment, 33.7% in October 2022 compared in 32% in 2021.

“Although they could be worse, these numbers are not very encouraging,” says University of Guayaquil economics professor Gustavo Velázquez. “As in the rest of the region, economic growth has stalled which means poverty rates will remain high and employment will be stagnant.”

According to Velázquez, businesses have “hunkered down” as a result of economic stagnation, putting off expansion and employment plans. “The attitude that we are stuck in neutral economically also affects the population in general and many people who are unemployed or under-employed are discouraged from seeking new opportunities.”