Experts warn poverty will reach 45% by year-end
INDEC data reveals 40.1% of population was poor in first half of 2023, but specialists warn true figure today is much higher.
More than four out of ten Argentines were poor in the first half of 2023 and experts warn that 45 percent of the population could be living in poverty by the end of the year.
Data from the INDEC national statistics bureau published this week revealed that 40.1 percent of Argentines were poor in June, a figure that equates to an estimated 18.6 million people in total when projected out to the whole population.
Of those, 9.3 percent of the economically active population was considered to be living in extreme poverty by the end of June, with destitution increasing across all regions nationwide.
Reacting to the news, Agustín Salvia, the director of the influential Observatorio de la Deuda Social of the UCA Catholic University, described the figures as “outdated” and warned that the true rate today is closer to 43 percent.
Former president “Mauricio Macri left a poverty rate of 38 percent and [President] Alberto Fernández will probably leave a rate of 45 percent and with more than 50 percent of the population benefiting from some system of economic assistance that seeks to alleviate the problem,” Salvia said in an interview with Radio Perfil.
For Salvia, the numbers for the first half of the year “hide several realities.”
“The figure given [by INDEC], which is already outdated because today we would be reaching 44 percent, hides two realities. On the one hand, 30 percent of Argentina is structurally and chronically poor, and even if inflation falls, it will not be easy to reduce this poverty,” he explained.
The stark figures, which were published by the INDEC national statistics bureau on Wednesday, were accompanied by a warning from specialists that poverty has likely worsened even further in the last month as a result of the August 14 devaluation of the peso against the dollar in the wake of tumultuous PASO primaries.
Publication of the new rate comes just a few days before the first presidential debate of the election campaign and less than a month before voters go to the polls. Economy Minister Sergio Massa is running as the candidate for the ruling coalition and is sure to face criticism from his main rivals, opposition leader Patricia Bullrich and libertarian frontrunner Javier Milei, over the number of Argentines who have slipped below the poverty line.
According to INDEC’S biannual Permanent Household Survey (EPH), which is based on 31 major urban conglomerates, 40.1 percent of the population was considered to be living in poverty in the first half of the year – a total of 11.8 million citizens. In addition, 9.3 percent were considered to be living in extreme poverty – a total of 2.7 million. Projected out to the whole population, that equates to 18.6 million people being considered as poor, with 4.3 million considered destitute.
Drilling down into the report, INDEC warns that 56.2 percent of people aged 0 to 14 are now considered poor. The highest numbers of poverty-stricken are found in the northeast of the country (42 percent) and Greater Buenos Aires (41.4 percent). The percentage of households falling below the poverty line was 29.6 percent, while 6.8 percent fell below the extreme poverty line.
The poverty rate stood at 39.2 percent of the economically active population in the second half of last year, 0.9 points difference with the latest figure and up from 37.3 percent in the first half of 2022. Extreme poverty affected 8.1 percent at the same time and has risen 1.2 points in the latest INDEC report.
The new figure is the highest recorded by INDEC since the peak of 42 percent registered in 2020 during the peak of the coronavirus pandemic.
ESTIMATES ON TRACK Most private estimates had forecast a rate of more than 40 percent, driven in large part but runaway inflation that hit record levels in August and falling purchasing-power.
Inflation, currently running at 124 percent per annum, totalled 50.7 percent in the first half of 2023 and has continued to rise. In the first eight months of the year, consumer prices have increased 80.2 percent. In August, INDEC reported a rise of 12.4 percent – the highest monthly figure in 32 years.
According to a recent report by the Social Debt Observatory of the UCA (Argentine Catholic University), the poverty rate reached 38.9 percent of the population in September, a rate similar to that observed in 2006, that is, 17 years ago; and this would rise to 50 per cent without the Universal Child Allowance (AUH) and other social plans, the study indicated. Children and adolescents are the most affected by this situation: in this case the rate reaches 61.6 percent up to the age of 17, according to UCA.
“Prices rise and families’ incomes cannot recover; over time they are always lower and with very significant losses from one month to the next,” said Eduardo Donza, a researcher at the UCA Observatory.
Donza said that, in addition to inflation, the employment status of many Argentines is “precariousness,” forcing many to look for additional sources of income to make it to the end of the month.
“There is a situation of loss of purchasing-power for all groups of the population,” agreed Leopoldo Tornarolli, a researcher at the National University of La Plata.
When President Alberto Fernández assumed office in December 2019, poverty stood at 34.7 percent. The number of those considered poor, however, soared during the Covid-19 pandemic and the accompanying collapse in economic activity.
Diego Silva feels the impact of inflation at his local butcher shop in Buenos Aires: customers are digging deep inside their pockets to buy beef, a staple of the local diet, due to a surge in prices which guts consumption.
Last month Argentina recorded the highest monthly inflation it has seen in three decades: a whopping 12.4 percent, bringing the annual rate to 124.4 percent over the last 12 months. All prices have risen, but food recorded the highest increase of 15.6 percent.
Mincemeat or ground beef rose 39.4 percent in August, according to a report from the INDEC national statistics bureau. More quality cuts are also following the trend.
“People who don’t have money come to buy little by little, day by day,” Silva says outside his shop in Mataderos, the capital’s historic ‘beef neighbourhood’ which was once home to a huge cattle market.
“They look at the prices, and end up choosing chicken or pork.”
This is the country of asado, where all celebrations call for the grilling and eating of meat.
Argentina is the main consumer of beef in the world, followed by Uruguay, the United States, Australia and Brazil.
In 2022, consumption rose to 52 kilos per capita, and this year “it will fall again to 46, 47,” similar to 2019 and 2020, explains Miguel Schiariti, the president of the CICCRA Argentine Chamber of Industry and Commerce of Meat and Derivatives.
“Beef is what we have the most of, and Argentines are carnivorous,” Silva notes.
‘CAN’T AFFORD IT’
This year, the price of beef has been increasing at a slower pace than general inflation. Several factors influenced this. The drought, for example, forced many producers to oversupply because corralled cattle fatten faster.
But then came a 20-percent devaluation of the peso, announced on August 14, a day after the PASO primaries. Costs, like feed – all in dollars – increased. Prices shot up 70 percent in two weeks and consumption plummeted.
“People couldn’t afford it anymore: it’s not that they could just put in 1,000 pesos more, it’s that [they would say] ‘I can’t buy it.’” The slump forced a stabilisation of the market, but “it is a bit more expensive,” Silva insists.
Soledad Nocito, for example, changed her eating habits.
“I started buying less red meat and more chicken, I started replacing it,” says the 36-year-old university professor, who works two jobs to make ends meet. “I buy more vegetables because of the increase in the price of meat.”
‘BIT SCARY’
René Godoy walks through Mataderos with her weekly groceries. He spent 20,000 pesos on beef, about US$55.
“It’s scary, it’s a bit scary,” says the restaurant employee. “I buy enough for the week, every week, to be able to survive, because the money just isn’t enough.”
CICCRA’S Schiariti estimates that the price will continue to increase this year, and the one to follow. With the end of the La Niña weather phenomenon and the return of the rain, ranchers hope to be able to graze their animals more and control the market.
On the other hand, due to the climate, many animals died and there were fewer pregnant cows and, consequently, less supply: “We are going to have between 1.3 and 1.5 million fewer calves,” said Schiariti.
Economy Minister Sergio Massa on Tuesday launched a differential dollar for oil and gas exporters from the Vaca Muerta basin in the quest for US$1.2 billion to boost reserves and trim the possibilities of exchange rate tensions in the lead-up to the general elections.
The export incentive programme, dubbed the ‘Dólar Vaca Muerta’ by analysts, will operate on the same basis as the latest version of the so-called ‘Dólar Soya’ or ‘Soy Dollar – i.e. not granting a higher exchange rate directly but permitting 25 percent of exports to be cashed at the CCL (contado con liquidación) exchange rate while the remaining 75 percent will use the official exchange rate. That equation will result in more convenient prices for exporters.
Massa’s aims here are clear to analysts: to boost the reserves of a Central Bank in the red, over and above the latest International Monetary Fund (IMF) remittances, and stabilise financial dollars to face, with the greatest calm possible, the closure of the electoral process and the final stages of the Alberto
Fernández Presidency.
Economic analyst Natalia Motyl agreed that “the government seeks to boost the reserves of the Central Bank and keep a lid on financial dollars … to halt, if needed, a run on the peso in the midst of the general elections.”
“Today the greatest worry is that the electoral atmosphere and the arrival of a new government do not increase the pressure on money markets, transferring it to prices and more inflation,” she told Perfil in an interview.
For Camilo Tiscornia, director of C&T Asesores Económicos, the new programme announced by Massa “is a direct continuation of the ‘Soy Dollar’,” applicable to the farming sector, and which “seeks, with winter over and the [Néstor Kirchner] gas pipeline functioning, to provide an incentive to cash dollars before the elections.”
Massa met oil executives from the fossil fuel basin such as YPF, Tecpetrol, Pampa Energía, Pan American Energy, among others, before making the announcement.
On Wednesday Massa visited Vaca Muerta works in Neuquén, together with the local Governor Omar Gutiérrez and the governors-elect Rolando Figueroa (Neuquén) and Alberto Weretilneck (Río Negro).
The minister explained that “reaching the October elections with stability in financial dollars” was being sought.
“It cannot happen twice. You learn from the errors,” Massa told them in allusion to the sharp effect of the August 14 devaluation of the peso on inflation.
Massa highlighted “the production and investment records for gas and oil” in Argentina. He further said: “With the [PASO primary] result there was some thought that uncertainty would halt the sector but we do not want to stop creating jobs and perforating to produce. Today we took the decision to recognise 25 percent of exports and bring investment into Argentina via contado con liqui [CCL] to guarantee stability in jobs, public works and the financial system.”
Unión Cívica Radical leader Alfredo Cornejo (Cambia Mendoza) will again govern Mendoza after securing a vital victory for Argentina’s main opposition coalition in the wine-producing region.
Cornejo, 61, will return as head of the region after taking 39.5 percent of the vote in last Sunday’s provincial elections with 99 percent of polling stations recording. The runnerup, breakaway former PRO deputy Omar De Marchi, running for the new Unión Mendocina front, polled 29.67 percent.
Peronist Omar Parisi (Eligí Mendoza) was well behind on 15.16 percent, followed by green candidate Mario Vadillo of the Partido Verde with 11.58 percent. Last place went to leftist Lautaro Jiménez of Frente de Izquierda y de Trabajadores – Unidad, with 4.09 percent.
WINNING STREAK Cornejo’s triumph permits Argentina’s main opposition coalition, Juntos por el Cambio, to continue a winning streak of provincial results. The centreright coalition is hoping to drive the presidential candidacy of Patricia Bullrich, who flew to the winning bunker together with her running-mate Luis Petri, a local boy in Mendoza, to hail Cornejo’s triumph.
In his speech, the Radical senator not only celebrated his triumph but also nationalised it, saying: “We want to ask the people of Mendoza but also of Argentina to make a safe and sustainable change in Argentina, steering clear of the ups and downs with the danger of populism returning in a very short time.”
Along those lines Cornejo continued: “That’s why we’re asking from Mendoza for your votes for the presidential ticket of Patricia Bullrich and Mendoza’s Luis Petri. Here we have a team to govern Argentina and take the country forward. You don’t just take a country forward with rage, we’re going to do it with ideas and projects.”
Apart from the Juntos por el Cambio presidential ticket, Cornejo was accompanied by two-term Corrientes Governor Gustavo Valdés, a leading Radical.
“This fills me with pride but also creates commitment, far more than I already have for the public service which I love, for which I have trained professionally and for which we have constructed a team which without doubt is a lot better than me,” reflected Cornejo.
His own running-mate, lieutenant-governor-elect Hebe Casado, gave a brief speech in which she tossed flowers at Cornejo, while digging at his EX-PRO rival Omar De Marchi.
“To all in Mendoza this is thanks to Alfredo Cornejo, who is a statesman standing head and shoulders above the rest of us, which is why I accompanied him. Also thanking Patricia [Bullrich] for her confidence because despite all the spokes in my wheel placed by De Marchi, I’m here. An enormous hug for De Marchi. Many thanks,” said Casado.
BREAKAWAY SECOND Just after 10pm, De Marchi, the former local PRO chairman who broke ties with the party back in April, climbed onstage at his bunker and thanked the voters who had supported him.
“What has happened here is good for us. Obviously we wanted to win, no false modesty there. We wanted to win, of course we did, we worked towards that. The Unión Mendocina has only been around for 160 days and it is not the rebranding of a pre-existing party but the birth of a new force which has arrived vigorously in this province. Our startingpoint is nothing more or less than the 30 percent of the Mendoza electorate accompanying us,” said the national deputy.
De Marchi’s local coalition,
Unión Mendocina, includes members of a party linked to libertarian presidential candidate Javier Milei, who scored 44.8 percent of the presidential primary in the province.
In De Marchi’s eyes, this will be the “first time in eight years” that Mendoza Province will have “a serious, responsible opposition identified with local interests.”
He declared: “The Unión Mendocina was constituted to govern this province. The Mendoza citizenry has placed us in a situation of enormous responsibility. We came within a few points of a regime which has been governing this province for the past eight years with all the accompanying power that signifies and that fairly insignificant difference fills us with pride.”
UCR VICTORIES Cornejo’s triumph in Mendoza gives the UCR, a party with more than a century of history, its fifth victory so far this year with its five provinces leaving it well placed on the national electoral map.
Firstly, Carlos Sadir held Jujuy Province for the party and will succeed outgoing Governor Gerardo Morales in December. Corrientes Governor Gustavo Valdés followed that up with a victory in the provincial midterms. The third winner was Maximiliano Pullaro in Santa Fe, followed by an upset win in a territory dominated by Peronism when Leandro Zdero ousted Chaco Province Peronist Jorge Capitanich (both elections earlier this month).
Cornejo has now capped this winning streak for the Radicals inland while in this City last month’s PASO primary saw the party come within 20,000 votes of winning within the Juntos por el Cambio coalition under the leadership of Senator Martín Lousteau.