World Bank: poverty could reach 44% in Argentina

World Bank claims that more than one-third of Argentina’s population could be hit by economic shocks

Approximately 33 percent of the country’s population — or those living on between US$4 and US$10 per day — is vulnerable to falling into poverty if faced with adverse economic conditions, the World Bank said in its 2015-2018 Country Partnership Strategy (CPS) report for Argentina.

The multilateral organization estimates there is a poverty rate of about 11 percent in the country, but has highlighted that Argentina should “focus on the need to sustain social gains achieved in recent years and expand social inclusion in an efficient and sustainable manner.”

The World Bank report, published for internal use in August of this year thus echoes warnings made by the United Nations Development Program (UNDP) about stalling social progress in the region.

Vulnerable populations, for the purposes of social policy, are those who have made it out of poverty but do not enjoy economic security like the middle class does. They live on an average US$4 to US$10 a day and risk being clawed back under the poverty line by economic turmoil, recession or volatility.

The UNDP recently warned that that up to one-third of Latin America is at risk of being clawed back in to poverty as the region’s economies face slowing growth rates.

The report praises the country’s recent economic policies, noting that “economic growth during 2003-2013 made Argentina one of the top two Latin America and Caribbean performers in terms of poverty reduction and improvements in shared prosperity.” But it also adds that the country’s most vulnerable populations have historically stemmed from the “economy’s exposure to adverse economic shocks, which reduces employment and earnings and limits the ability to finance social programmes supporting the poor.”

The very same report adds that economic activity rallied in 2010-11 but has since slowed, fiscal accounts are under pressure as a result of expenditures outpacing revenues and that a worsening trade balance has lead to a deterioration of external accounts.

Despite action by the government to tighten monetary policy and restrict some spending, a low debt-to-GDP ratio, the World Bank is anticipating that in that the short-term a “prolonged slowdown is more likely than a deep economic rift” as a result of sluggish economic performance, continued inflation, dropping international reserves and continued uncertainty over the holdout debt saga and reduced economic growth in China and Brazil.

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Image from Reuters

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