The Covid-19 pandemic has hit Latin America and the Caribbean hard, which has already registered more than 1.3 million deaths caused by the coronavirus. In addition to the loss of life, the economic and social impacts are also extensive: around 4.7 million people were expelled from the middle class and fell into vulnerability or poverty in the region, according to a World Bank report.
This sudden shift possibly reverses social gains that have been slowly achieved in recent decades, says the report, entitled “The Gradual Rise and Rapid Decline of the Middle Class in Latin America and the Caribbean.”
The World Bank reports that the number of people living in poverty in Latin America and the Caribbean (LAC) has almost halved and the middle class has increased in the last two decades, but growth has stagnated in recent years in the region, one of the hardest hit by the economic and health impacts during the pandemic and still struggling to combat Covid-19.
With the coronavirus crisis, there was a setback in this scenario. By 2020, the middle class had shrunk to 37.3% of the population, the group of people in vulnerable situations increased to 38.5% and those in poverty now account for 21.8% of the total population of LAC.
For the entity, the middle class is formed by people with daily per capita income between US$ 13 and US$ 70; those in vulnerable situations live on $5.50 to $13 a day and the poverty line is $5.50 a day.
Social protection programs have helped to reduce negative impacts, at least in the short term, assesses the World Bank, which points out that if there is no rapid and inclusive economic recovery, poverty could increase again in 2021. The report states that the impact would still be more dramatic without stimulus measures, such as the social program of temporary cash transfer in Brazil.
“Without mitigation measures, especially without emergency transfers from Brazil, projections indicate that the global pandemic could have resulted in more than 20 million people losing middle class status,” say the study’s authors, who point out that the Brazil greatly drives changes in LAC because of the large share of the Brazilian population in the region as a whole (almost 38%) and the proportion of the country’s population living in poverty.
For economic recovery, the World Bank recommends ensuring broad access to vaccines, developing efficient systems to distribute them, and strengthening health systems in the region.
The region is at a “crossroads,” described Carlos Felipe Jaramillo, World Bank vice president for Latin America and the Caribbean. “The reversal of hard-won social gains runs the risk of becoming permanent unless bold reforms are made,” he declared.
“Emergency cash transfer assistance, which helped to lessen the impact of the pandemic, will not be sustainable for long; thus, the region needs to move forward with policies that ensure a solid recovery and provide for more sustained, resilient and inclusive growth that will fight persistent poverty and inequality,” added Jaramillo.
In the last decade, there have been two distinct periods of growth and poverty in the region: one of sustained growth and strong poverty reduction, until 2013, and the following period of stagnant poverty and slowing growth, from 2014 to 2019.
“Just as the region was seeing a glimmer of recovery from the stagnation period, the Covid-19 pandemic forced economies to close,” the report says.
With the restriction measures and the decline in economic activities, a 6.7% drop in the Gross Domestic Product (GDP) of Latin America and the Caribbean in 2020 is estimated, making this the worst recession in the region’s history, says the Bank World.
The report also highlights the lack of access to essential services in LAC: less than 1 in 4 poor families have adequate sanitation, 9% do not have access to electricity and only 25% use the internet at home.
The economic impact of the pandemic has caused many Latin Americans to seek better living conditions in other regions, despite the restrictions on mobility and the closing of borders imposed by the health crisis.
This is the case of many Argentines, who already suffered from successive economic crises, now aggravated by the pandemic, and who have sought other places to settle.
In October 2020, 51% of Argentines interviewed said they would leave the country if given the opportunity, reported a survey by consultancy firm Innovation, Policy and Development (IPD). Among young people aged 16 to 25, the percentage reached 71%. The feeling of discontent led the Argentine government to ask young people not to leave the country, despite the crisis.
Most of the Argentines who want to leave their country are from the middle and upper-middle classes. They prefer destinations such as Spain, Italy, the United States, as well as more accessible countries in the region, such as Uruguay, Chile and Brazil.
“The Argentines who come [para o Brasil] they are middle class and are desperate,” said Marcelo Taormina, who came to Brazil with his wife and seven children from Argentina in 2013, to Infobae.
Today, the family helps, with a support network, Argentines who want to emigrate here. “They closed their businesses, they have no possibilities and most are entrepreneurs, who had to close their doors. They sold the work machines to be able to travel and had to donate them. The Argentine is without money, selling things that took years to buy , put together what you can,” he said.
In Venezuela, emigration could reach seven million people by the end of this year or the beginning of 2022, surpassing the exodus from Syria, considered the largest in the world with 6.7 million refugees and migrants who left the country devastated by war, warned the Organization of American States (OAS).
Before the pandemic, five thousand Venezuelans fled the country daily, which is facing a serious and prolonged economic and social crisis under the dictatorship of Nicolás Maduro. But the impact of Covid-19 motivated more than 150,000 to return to their hometowns. However, the OAS study warns that, from September 2020 until now, even with the closing of borders, about 700 to 900 Venezuelans “flee daily along irregular routes: maritime routes or dangerous trails”.
The main destinations for Venezuelans are Colombia, Peru, the United States, Chile and Ecuador.