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Extreme poverty rate in BA City has doubled since 2015, new data shows

Economic turmoil of 2018 hits hard, as number of those living in destitution rises to 198,000.

Saturday 2 February, 2019
The numbers of destitution in BA city from 2015 to 2018.
The numbers of destitution in BA city from 2015 to 2018. Foto:JOAQUIN TEMES

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Almost 200,000 people in Buenos Aires City are considered to be living in extreme poverty, new statistics show, with the number having practically doubled in the last four years.

New data from the City Government’s General Directorate of Statistics and Census for the third quarter of 2018 indicates that the destitution rate – those that cannot afford the basic food basket – has risen to six percent since Buenos Aires City Mayor Horacio Rodríguez Larreta took office in 2015.

Three years ago, the capital had 100,00 people below the destitution line, City data shows. A year later, that figure had risen to 146,000, dropping 12 months later slightly to 140,000. Latest figures however indicate the number of individuals in extreme poverty has risen to 198,000 – a 41-percent increase from 2017 to 2018 – illustrating how last year’s economic turmoil eroded gains in the battle against poverty.

“The most vulnerable social classes have suffered during the last few years, especially in 2018, as there was a big economic drop linked to inflation,” said economist Leandro Mora Alfonsín. “You can see that not only in the percentages given out by the City but also when just walking across town.”

The steep increase in the destitution rate can be directly linked to this year’s drop in purchasing-power, which is reflected in the fact that the food basket increased at a faster pace than that of incomes, said Martín González Rosada, economist at Torcuato di Tella University.

Inflation in Buenos Aires City reached 45.5 percent in 2018, with a final 2.4 percent increase registered in December. The City’s statistics department linked the rise to the devaluation of the peso and hikes in the public utilities tariffs. Transport was the area with the largest price increases last year, reaching 62 percent.

“If you take into account that the economic and employment rates remained relatively constant, while the unemployment rate dropped and the underemployment rate rose, the explanation for the increase of the destitution rate comes from the evolution of incomes and the [price of the] food basket,” González Rosada added.

The total food basket in the City, used to measure poverty, rose 47.7 percent in 2018, meaning an average family of a couple and two kids needed 24,865 pesos not to be considered poor. Meanwhile, the basic food basket, the one used to measure destitution, rose 49 percent last year, with 12,237 pesos needed not to fall below that line.

POVERTY ON THE RISE

The City report also registered an increase in the number of people living under the poverty line. That figure rose from 16 percent in the first quarter of the year – 491,000 people – to 20.9 percent in September 2018, the latest figure available. This means there are now 639,000 people considered to be poor in Argentina’s capital.

In 2015, poverty in the City stood at 13.5 percent, which means it has increased 54.3 percent in three years. The data shows a steep increase in 2016, a minor improvement in 2017 and again an increase last year. There were 414,000 people under the poverty line in 2015, 552,000 in 2016 and 519,000 in 2017 as the economy improved. However, the economic turmoil witnessed since April has discounted those gains.

Buenos Aires City legislator Santiago Roberto, from the Peronist caucus, branded the figures as a “failure of the economic policies” implemented by the Cambiemos (Let’s Change) coalition in the City, saying social differences in the capital were “ evident at first sight.”

“The City has a GDP per capita similar to that of Israel or Portugal, but it has a 21 percent poverty rate and [has] doubled the destitution rate over the last few years,” he added.

On a national scale, poverty reached 27.3 percent in the first semester of the year, while destitution was at 4.9 percent, the latest official figures available, according to the INDEC statistics bureau. Greater Buenos Aires was the area with the most worrying indexes, totaling 3,843,746 people under the poverty line.

Increases in the poverty rate could follow the existing trend or even worsen in the near future, as the report’s timeline didn’t reach to the point of the worst effects of the devaluation of the peso and the steep public utilities hikes, some experts argued this week, anticipating larger figures to come.

As an advance on that, the Catholic University of Argentina (UCA) said in a recent report that poverty had reached 33.6 percent on the third quarter of the year, a 19-percent interannual increase and the largest figures seen in the last decade. This means there are 13.2 million poor people in the country in total.

“Last year we had a record inflation rate, the highest since 1991. The drop in purchasing-power was also terrible, almost seven percentage points in 2018. The most vulnerable social classes saw the worst of this by being part of an informal economy,” said Mora Alfonsín.

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