The October 2024 edition of the Regional Poverty and Inequality Update presents the most up-to-date data for the Latin America and Caribbean (LAC) region, highlighting key insights on macroeconomic trends, poverty, inequality, job quality, and other factors that are crucial for understanding the major challenges that the region faces today.
Here are 10 key facts of our latest publication:
Key Fact #1: Poverty in LAC has fallen to its lowest point thus far this century, with one in four people living on less than US$6.85 per day (2017 PPP). This corresponds to a reduction of 4.7 percentage points (p.p.) in the regional poverty rate between 2021 and 2023.
Key Fact #2: LAC is a diverse region in terms of poverty, with rates ranging from below 10 percent in Chile and Uruguay to more than 50 percent in Guatemala and Honduras.
Key Fact #3: The slow pace of poverty reduction in LAC since 2016 reflects the low levels of economic growth in the region. During this period LAC saw economic growth levels significantly below those of other middle-income regions. Concurrently, while in 2009 the poverty rate in East Asia and Pacific (EAP) was almost 30 p.p. higher than in LAC, by 2023 poverty levels had converged in the two regions.
Key Fact #4: While the middle class in LAC expanded to 41.1 percent in 2023 (the highest level this century), 31.5 percent of the population remains vulnerable, living on US$6.85 to US$14/day. This socioeconomic class is at major risk of falling into poverty during economic downturns or shocks.
Key Fact #5: A more robust labor market explained almost two-thirds of the decline in poverty between 2021 and 2023. The reduction was driven by higher employment rates (1.8 p.p.), increased labor earnings (1.5 p.p.), and public transfers (1.1 p.p.). Additional factors like remittances and other non-labor income sources contributed smaller reductions of around 0.3 p.p. each.
Key Fact #6: While recovery from the pandemic has been progressive, economic growth became less pro-poor in 2023. Between 2021 and 2022, income growth was significantly higher for poorer households than for their richer counterparts. However, the rate of income growth declined between 2022 and 2023, and became more similar for poor and rich households.
Key Fact #7: Modest economic growth is expected to slightly reduce poverty in LAC in 2024. According to our Nowcasting model, the regional poverty rate is projected to decline to 24.7 percent in 2024.
Key Fact #8: Even though LAC benefited from a significant postpandemic labor market rebound, the Job Quality Index (JQI) shows that employment quality has barely improved. The Job Quality Index (JQI) shows stagnation across most countries in the region since 2016. Only five—Brazil, Colombia, Costa Rica, El Salvador, and Mexico—achieved modest gains, with increases ranging from 0.02 to 0.05 points. Meanwhile, job quality declined or remained stagnant in six countries: Argentina, Bolivia, Ecuador, Panama, Peru, and Uruguay.
Key Fact #9: There also remains a significant gender gap in job quality across the region, with women experiencing worse job conditions than men across all countries. Peru, Ecuador, and Bolivia face the largest gender gaps in the region.
Key Fact #10: Finally, a tighter fiscal space challenges the sustainability of public transfers, the gradual phasing out of which is already affecting the incomes of poorer households across several economies in the region.
For more in-depth analysis and information, read our October 2024 edition of the Regional Poverty and Inequality Update.
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