COVID-19 Could Increase Extreme Poverty in Latin America by 22 Million

According to Alejandro Werner, the head of the International Monetary Fund (IMF), COVID-19 has converted the economic perspective in Latin America into the most horrible it has been in over 500 years.

The same pessimism is demonstrated in the fluctuations of manufacturing, remittances, materials premiums, and tourism. 

According to economists, the said conversion, which is also considered a threat to the country, would be exceptionally robust on social development's key metric, which, they said, is "extreme poverty."

Based on the figures presented by IMF, if the pandemic's development results in a 5-percent drop in the active population's average income, the number of Latin Americans who are in extreme poverty would increase to between "67.5 million and 82 million."

If the drop in wages for the so-called financially active populace were ten percent, the figure would then rise to nearly 90 million individuals.

Latin America Before the Outbreak

Since ten years ago, even before the occurrence of COVID-19, Latin America has not been "heading the right direction" in its initiative to stop the curse of extreme poverty, which was set out in the UN roadmap.

Following the decade-long effort of improvement, the population's rate in an extreme famine condition in Latin America has been over given years binding rises on an already extremely high basis from the year 2012 at the 8.2-percent minimum, has been passed over twice the digit.

This low development and the lower redistributive strength of several administrations in the region have been experienced already, in recent times, as the social progress's key indicator.

However, the pandemic is the main highlight-without necessarily considering the impact of, specifically, COVID-19. This indicator, according to reports, would have attained 10.7 percent towards the end of 2020.

And, with this pandemic already included on the risk map, figures are expected to shoot up to 13.3 percent.

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Crisis Faced

In the new set-up, the most hopeful computations which anticipate a decrease of 1.5 percent in inequality, and rise of fiver percent in GDP per capita, a point to the extreme poverty of roughly 2.9 percent in 2030.

Meanwhile, the most doubtful minus change in the distribution pattern, and with a one-percent growth per capita, is slightly below nine percent.

Nevertheless, the shaking of COVID-19 on the fundamentals of the economy is the main highlight at present. Relatively, the most hopeful computation points to the extreme poverty of roughly 5.7 percent of the populace in 2030, and in the most doubtful, 11.9 percent.

ECLAC Executive Secretary Alicia Bárcena said during a monograph's presentation on the social and economic consequences of COVID-19 in Latin America, the world is currently facing an unmatched humanitarian and health crisis over the last 100 years.

The executive secretary added that this is not a financial crisis. Instead, it is more of a crisis in health and welfare. Bárcena also explained that it is not the market's but the State's role, that's going to be essential in addressing the crisis.