Poverty in Latin America is Declining, But Not Evenly

The latest report from CEPAL, the Economic Commission for Latin America and the Caribbean, shows poverty in Latin America is at its lowest since the organization began recording data. Extreme poverty is at 9.8% and poverty is at 25.1%. However, these numbers do not tell the full story.

A quick footnote in the report reveals a more accurate picture of the region. In reality, across the vast majority of Latin America and the Caribbean, poverty reduction has stagnated, and it’s only the progress of Mexico and Brazil, especially Mexico, that is leading to an overall reduction throughout Latin America.

The footnote reads: “The reduction in poverty in 2024 was due mainly to the performance of Mexico and, to a lesser extent, Brazil, which accounted for 60% and 30% of the regional decline, respectively. In the case of extreme poverty, these countries contributed 49% and 31% of the reduction, respectively. Without their results, the regional decline would have been small and rates would have remained at around 2019 levels.”

Therefore, Mexico and Brazil contributed to a total of 90% of the decline in poverty and 80% of the decline in extreme poverty. While Mexico and Brazil are of course highly populated countries, they only make up less than half of the region’s total population.

The poverty rate in 2019 showed 11.3% of people in extreme poverty and 30.2% in poverty. As stated above, any changes from this rate would be minimal if you were to remove Brazil and Mexico.

This particularly shines a light on Mexico’s success in poverty reduction. Mexico has pulled 13.4 million people out of multi-dimensional poverty since 2018, when the Morena party came to power.

The report also noted the success of Honduras’s democratic socialist government in reducing poverty.

According to Honduras’s internal statistics, since their 2021 elections, the percentage of households in conditions of poverty have gone from 73.6% to 62.9%, with those in extreme poverty going from 53.7% to 40.1%. The overall poverty rate fell from 73.6% to 60.1% and the extreme poverty rate from 53.7% to 38.3%.

The CEPAL report shows a significant drop in Honduras’s Gini Coefficient, which measures inequality. In 2021, the coefficient stood at 0.535, the third most unequal in the region, and in 2024, this went down to 0.457.

This marks an important reversal of the previous trend in Honduras, where poverty had gone from 58.8% to 73.6% from 2009 to 2021.

A key part of this reduction is due to an 82% increase in the minimum wage since 2022, with the minimum wage going from 9443.24 lempiras to 17,238 lempiras per month.

Honduras held elections on November 30, where the LIBRE party, which had hoped to continue its democratic socialist project, was dealt a surprising defeat by the right-wing parties.

Latin America finds itself in an interesting predicament, Argentina, Peru, Paraguay, Ecuador and Bolivia are all governed by right and far-right administrations, with Honduras and potentially Chile joining them soon. However, Mexico and Brazil continue to make significant strides in reducing poverty and improving quality of life for their citizens with more socially-focused governments.

Gustavo Petro in Colombia has made some progress towards raising the minimum wage and reducing poverty, but has been struggling to pass constitutional reforms due to not having majority support, amongst other obstacles.

Meanwhile, Cuba, Nicaragua, and Venezuela continue to deal with overbearing US sanctions.

Courtesy: peoples Dispatch