Argentina faces a devastating social reality: half of its population is poor. The data released by the Observatory of Argentine Social Debt The data from the Catholic University of Argentina (UCA) for the second quarter of the year (49.4%) shows an improvement compared to the first, when the adjustment policy applied by Javier Milei at the beginning of his mandate caused poverty to rise to its highest level in two decades: 55.9%.
The number of people living in extreme poverty or indigence – that is, without enough income to buy food – doubled between March 2023 and March 2024 to 20.3%. Three months later, it dropped to 15.9%. The figures are projections made by the Observatory based on the Permanent Household Survey carried out by the National Institute of Statistics and Census (Indec). Official poverty data will be released at the end of the month.
Statistics seem to indicate that the country has hit rock bottom, but it is still too early to confirm this. The incipient recovery is not due to an economic revival that generates new jobs, since Argentina is in recession, but to the decline in an inflation rate that caused prices to rise at an increasingly faster rate than wages. In 2023, the country placed itself on the world podium with an inflation rate of 211.4%. In the last three months, the CPI has stagnated at around 4% per month, but it is still a third of what it was in November, the last full month of Alberto Fernández’s government.
The director of the Observatory, Agustín Salvia, highlights the relationship between the reduction in the rate of inflation and the decrease in poverty. “The fall in inflation allowed households and businesses to better plan their spending,” says Salvia. At the same time, he points out that a slow economic recovery has begun in some dynamic sectors – agriculture, energy, mining and finance – but the recession continues in those more closely linked to the domestic sector, such as manufacturing and services. If it continues, job losses will accelerate and the reduction of poverty will be put at risk.
This sociologist warns that the improvement in income is also uneven: “Private sector employees managed to agree on salary increases in recent months that were outpacing inflation, but not the public sector, which is matching inflation, nor informal workers. [sin contrato]which continue to lose.” As a result, he concludes, “poverty decreases but inequality increases.”
Subsidies to cushion the crisis
The Argentine economy has been stagnant for more than a decade and socioeconomic indicators show an unprecedented deterioration —with the exception of the 2020 collapse due to the Covid pandemic— since the corralito crisis of 2001-2002. Unlike then, however, the cushion of social aid created in recent decades has partly cushioned the blow for the most vulnerable families. Without these subsidies, poverty rates, and especially indigence rates, would be much higher than they are today.
Looking further afield, statistics show that each economic crisis shrinks the Argentine middle class a little more and increases the number of households that are left behind economically. “Ten years ago, Argentina had a 25% rate of structural poverty and today we estimate that it is 30%. In other words, they are poor, their children are poor, and their parents were poor too,” explains Salvia.
The director of the Observatory believes that Argentina is facing a systemic crisis of the economic and political model that has been in force in the country for the last two decades. “It was no longer sustainable because Argentina was not growing, generating employment or attracting investments, and Milei has begun to dismantle it at a high social cost with a strong adjustment and liberalization of prices,” he believes.
Milei boasted to the leaders of the Ibero-American far right on Wednesday that he was running “the best government in the history of Argentina,” but the challenge he faces in moving forward a country with more than 20 million poor people is enormous.
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