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For the World Bank, 1.7 million Argentines fell out of the middle class in 2020

2021-07-21T10:38:50.945Z

The middle class fell from 51% to 45% of the population, according to the document, which revealed the impact of COVID-19 in Latin America and the Caribbean. Blue dollar today: how much it is trading at this Wednesday, July 21



Gustavo Bazzan

07/20/2021 11:31 PM

  • Clarín.com

  • Economy

Updated 07/21/2021 7:34 AM

In various international measurements, Argentina has been

ranked very badly

when considering how the authorities of each country faced the health and economic crisis derived from the pandemic.

This is also reflected in a recent World Bank report.

The work estimates that 1.7 million Argentines fell out of the middle class last year.

The figure comes from evaluating the data from the INDEC Permanent Household Survey, which is representative only for the 31 urban areas where 29.8 million people live.

The World Bank technicians who participated in the preparation of this report told

Clarín

.

“Estimates for Argentina show that

before the pandemic around 51% of the population

(represented in the survey) was in the middle class.

This is around 14.7 million people.

Under this logic, in 2020, after the economic crisis caused by the pandemic and the mitigating effects of the response through social programs, an approximate of

1.7 million people

would have left the middle class ”. 

The report says that the portion of people included in the middle class

dropped from 51% of the population to 45%.

If the estimate were extended to the total Argentine population, the number of fallen from the middle class would quietly be around

2 million people.

To define a middle-class person, the report indicates that within this socio-economic group are people who had incomes of

between $ 13 and $ 70 per day,

expressed in

"purchasing power parity

.

"

The PPP thing applies because in Argentina things are cheaper than in the United States.

In other words, with 10 dollars at the official or parallel exchange rate, more things are bought in Argentina than in the United States with the same 10 dollars.

The PPP factor is used to adjust for these differences.

The COVID-19 pandemic had

devastating effects

in Latin America, which registered, at the end of July,

more than 37 million cases and close to 1.1 million deaths.

The quarantines in turn wreaked

havoc in economic terms that had not been seen for a long time

.

The World Bank report focuses on the impact of the pandemic on the continent's middle class.

The title

: “The slow rise and sudden fall of the middle class in Latin America and the Caribbean”

.

There it marks the contrast between the expansion of the middle classes in the region that had been observed, with more and less, until 2019 and the

sudden decline

due to the virus.

Two conclusions from the report

:

- “The 2020 crisis is likely to

reverse in a short time many of the social achievements that took decades to materialize

in Latin America and the Caribbean.

In the last two decades, the region has seen the number of people living in poverty reduced by almost half and the size of its middle class increased. ”

- In 2019, Latin America was a predominantly middle-class region, with 38 percent of its population, approximately 230 million people, achieving middle-class status.

However, this socioeconomic group is projected to have declined to 37.3 percent of the population in 2020, representing

a net loss of 4.7 million middle-class people.

In Argentina, the economic impact of the pandemic on the middle class occurred at various levels.

Many people were unable to go out to work,

especially self-employed, self-employed or monotributistas.

Not to mention the informal sector.

The

entry of women

also suffered

, in many cases forced to stay at home to care for their children, who in turn were unable to attend school for much of the past year.

However, the World Bank report admits that

without palliative measures, the exit of the middle class could have reached more people.

For palliative measures, in the case of Argentina, mention should be made, among others, of the IFE, the supplementary bonuses for beneficiaries of the AUH and other social plans, the ATPs and the Alimentar Card, for example.

The damage to Argentina was perhaps more serious, compared to most of the countries in the region, because it found the country with an economy that was already in recession and with serious operating problems.

Without the possibility of taking on debt in the capital markets, the government was forced to

substantially increase public spending

to compensate - very partially - the economic sectors hardest hit by the quarantine, both companies and their workers.

A part of this expense was financed with debt in pesos, another with pesos issued by the Central Bank.

The monetary issue of 2020 is what keeps inflation still very high in 2021 and what explains part of the rise in poverty projections, which

could reach 50% by the end of the year

.

Look also

Argentina, crisis and the middle class: how to get out of ten years of stagnation

Less and less porteños belong to the middle class due to the recession, inflation and falling income

Source: clarin

All business articles on 2021-07-21

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