Poverty Soars in the World's Most Unequal Region
Bloomberg Markets|June - July 2021
THE COVID-19 pandemic has sent a wave of poverty racing across Latin America, deepening declines that began over the past decade and consigning millions to lives of deprivation.
PATRICK GILLESPIE and MAYA AVERBUCH

The world’s most unequal region saw 22 million people—the equivalent of everyone in New York state—join the ranks of the poor from 2019 to 2020, unable to meet basic needs. In all, about one-third of Latin America’s roughly 600 million residents live in poverty or what the United Nations defines as extreme poverty: subsisting on less than $1.90 a day.

Short of vaccines and hospital beds, Latin America has been uniquely hard hit due to the intensity of the pandemic and thesteepness of its recession, the worst in two centuries. The region accounts for about 30% of the world’s Covid deaths, despite having only 8% of its population. Its economy contracted 7% last year, more than double the decline of any other region.

The crisis is warping societies in ways large and small. A massive Rio de Janeiro library and cultural complex has become a riotous, besieged soup kitchen. In Bogotá, idled musicians serenade the rich, who toss them bags containing small bills, with a coin or two for ballast, from the balconies of luxurious apartments. In Mexico City, even attorneys are resorting to pawnshops.

Workers who had attained a tenuous stability are finding themselves jobless. People who labor in the vast informal sector are finding traditional networks of casual employment disrupted. For the unluckiest, life has been reduced to a constant search for food.

In Mexico City’s Calle Monte de Piedad, lawyer Juliana Ortega Aguilar, 36, waited outside the charity that gives the street its name. The centuries-old institution was founded to give the poor affordable loans. Inside, her mother was pawning jewelry; the legal office where her husband works closed amid the pandemic. She said few cases were arriving on her own desk.

“We’re a houseful of lawyers, but there’s no work,” Ortega says. “We all have to pay rent or a mortgage, the electric bill, and even if the kids aren’t going to school, they have to eat, and they get sick.”

Across the region, people who reached the middle-class life are trying to cling to it.

After years of renting in La Plata, Argentina, Romina Bravo, 44, and her husband bought a three-bedroom house in 2017 where now 7-year-old Benicio and 14-year-old Valentino could grow up. They signed up for a government-promoted mortgage with payments tied to inflation, which was supposed to go down.

Instead, it soared, because of a lack of confidence in the peso and a failure of government price controls. Bravo lost her bank job of 22 years right before the pandemic, and her new position as a court administrator pays the equivalent of about $320 a month, a fraction of her previous salary. A mortgage payment freeze just expired. Bravo put the house up for sale in March.

“It’s either I eat or I pay,” says Bravo. “I’m hoping for help. Otherwise I’ll be the next one evicted.”

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