Poverty declining in Latin America

Poverty is falling in Latin America, and so is inequality – a rare cause for celebration in a world otherwise plagued by financial woes – and yet another sign that the balance of global economic power is shifting to emerging economies.

The percentage of those living in poverty in 2010 dropped to 31.4 per cent from 48.4 per cent in 1990, according to a report from the United Nations Economic Commission for Latin America and the Caribbean. This is the lowest rate since experts began collecting data in the 1970s.

The region deserves kudos for transforming itself in the past two decades, thanks to structural reforms and sound economic management, especially in Mexico and Brazil, which comprise two-thirds of Latin America’s economy.

Public-sector fiscal prudence, lower inflation and debt reduction have helped fuel economic growth and rosier long-term investment picture. This, combined with transfers of wealth to the poor, resulted in rising standards of living for millions. “The macroeconomic success of Brazil, and other countries, has been complemented by the micro-policies, such as increased social spending and poverty reduction,” noted Jonathan Hausman, vice-chair of the Canadian Council for the Americas. Latin America’s GDP expanded by 5.9 per cent last year, and is forecast to be about 4.5 per cent this year. Of course the region still faces many challenges: high crime rates in Venezuela; Mexico’s drug war; and Brazil’s infrastructure hurdles as it prepares for the 2014 World Cup. Inequality is still the highest in the world, even though it too has fallen in the last two decades, while rising in the U.S. and Canada.

Still, the report is well-timed, on the heels of a visit from the International Monetary Fund’s managing director to Brazil, Mexico and Peru, cap in hand, to ask the countries to consider providing aid to the ailing euro zone economies. Such a role reversal would have been unimaginable five years ago. Latin America’s long-term advances may be difficult to sustain, but they will also be difficult to completely reverse.

Original Article
Source: Globe