Protecting nature could prevent global economic losses of $ 2.7 trillion per year

The COVID-19 pandemic pushed 4.7 million people out of the middle class and into vulnerability or poverty in Latin America and the Caribbean (LAC) last year, likely reversing decades of social gains, according to a new report from the World Bank. The impact was even more dramatic if the effect of a massive and temporary social transfer program in Brazil is excluded from the projections. Without this compensation from Brazil, a total of 12 million people in the region slipped out of the middle class in 2020.

The same is true of poverty. Across the region, there were 400,000 fewer poor people in 2020, but without Brazil’s compensation, an estimated 20 million people fell into poverty in 2020, with a further increase of 1.4 million due to population growth, according to The gradual rise and rapid decline of the middle class in Latin America and the Caribbean.

Over the past two decades, the number of people living in poverty in the region has fallen by almost half. The middle class (per capita daily income between $ 13 and $ 70 per day) has overtaken the vulnerable (living from $ 5.50 to $ 13 per day) and the poor (below the poverty line of $ 5.50 per day) as the largest group in 2018, but growth has stagnated in recent years and the region has been one of the hardest hit in terms of health and economic costs during the coronavirus pandemic. In 2020, the middle class fell to 37.3% of the population, the vulnerable class grew to 38.5% and the poor made up 21.8% of the population in LAC.

“The Latin America and the Caribbean region is at a crossroads, and the reversal of hard-earned social gains risks becoming permanent if bold reforms are not implemented,” said Carlos Felipe Jaramillo, vice-president -President of the World Bank for Latin America and the Caribbean. . “The emergency cash transfers that have helped mitigate the impact of the pandemic will not be sustainable for too long, so the region must move forward with policies that will ensure a strong recovery and lead to more sustained, resilient growth. and inclusive that tackle persistent poverty and inequalities.

While mitigation measures, including social protection programs, have helped limit negative short-term impacts, without a rapid and inclusive economic recovery and similar levels of mitigation measures, poverty could rise again. in 2021. Ensuring broad access to vaccines, developing efficient and effective systems for their distribution and administration, and strengthening health systems across the region will be critical to recovery.

In addition, the crisis has amplified the harmful effects of inequalities in the region. More than half (54.4%) of workers in the region are in the informal sector, 9 out of 10 workers living in poverty are in the informal sector and almost a third are self-employed.

“Those who were worse off initially will likely be the most affected, leading to increased income inequality in an already highly unequal region,” said Ximena Del Carpio, practice manager for the practice group on World Bank poverty and equity. “Access to basic services such as electricity, adequate water, sanitation and even the internet has become even more essential under the lockdown measures.”

However, less than one in four poor households have adequate sanitation, 9% do not have access to electricity and only 25% use the Internet at home. In the face of the pandemic and the ongoing uncertainty, governments must prioritize equitable access to essential services.

The lockdowns have highlighted the importance of broad internet access and alternative methods of purchasing goods and services. Countries should continue to invest in digital infrastructure to accelerate these changes and enact legislation for the expansion of the digital economy.

In addition, social protection programs should be reassessed to adjust their scope and integrate new beneficiaries. Income transfers are useful in providing vulnerable groups with some income security during times of lockdown, but they are temporary and may not be enough to prevent the sharp decline of the middle class.

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