A broader view of poverty in South America

$1.90 per day in 2011 PPP is the International Poverty Line. It is used by the United Nations to define Sustainable Development Goal 1 (No Poverty). This measure was created as an average of the minimum necessities in the 15 poorest countries in the world and, consequently, it is not enough to analyze poverty in middle and high-income countries. In poorer countries, a person might need only clothing and food to be part of the job market. But in a richer country, in addition, a person may also need internet, transportation, and a mobile phone.” Therefore, $1.90 a day may be in the words of the World Bank: "too low to adequately capture whether or not someone is poor."

For this reason, to complement the $1.90 per day poverty line, the World Bank has introduced two higher value poverty lines: $3.20 and $5.50 per day. Using these thresholds, we will examine poverty in South America through a new lens using data from our World Poverty Clock.

Venezuela

As was mentioned in our previous post, poverty is decreasing in every country in South America except Venezuela. The population with less than $1.90 a day is expected to increase from around 9 million in 2019 to 16 million in 2030. Using the higher thresholds, the following chart shows the aggregated figures for all of South America and the share that corresponds to Venezuela.

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Our data shows the severity of the crisis unfolding in Venezuela and the future that lies ahead if the country continues the same path. Only 4 million people are expected to have more than $5.50 a day in 2030, compared to roughly 9 million in 2019. Compared to Colombia, a country with an even larger population, it is clear that the next decade will continue to be a troubled one for its citizens.

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Colombia and Ecuador

Colombia is expected to achieve SDG 1 in 2023. Their southern neighbor, Ecuador, did so in September 2016. Nevertheless, the projections show that Colombia is expected to reduce poverty faster than Ecuador even though both countries are considered to be upper-middle-income economies. Currently, approximately 10% of Ecuadorians and 12% of Colombians have less than $3.20 per day. In 2030, 8.5% of Ecuador is expected to be below this threshold, while approximately 7% of Colombians are expected to have less than $3.20 per day. The trend for the $5.50 per day poverty line is similar.

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Brazil

With a population of 210 million, Brazil represents half the population in South America. Brazil is expected to achieve SDG 1 by 2029 and the population living below $1.90 per day is expected to decrease by 35% over the next ten years. Since Brazil is a middle-high-income country, higher poverty lines become particularly relevant to evaluate poverty. These thresholds show a more modest reduction in poverty: currently, 11% of Brazil’s population are living on less than $3.20 per day and this number is expected to decrease 23% by 2030. 23% of the current population is below the $5.50 per day threshold. This number is also expected to decrease, but by a slightly less 18% by the end of the next decade. Similar to recent World Bank reports, our data indicates that the higher the threshold the more modest the improvement observed.

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Guyana and Suriname

The tiny country of Guyana (population 750,000) is expected to see the most dramatic poverty reduction in all of South America. Today, 29% of the population has less than $5.50 per day. This is expected to decrease by 92% by 2030 to affect only 2% of Guyanans. This achievement is impressive considering that currently more than 5% of the country are living on less than $1.90 per day. Therefore, according to our projections, Guyana is expected to achieve SDG 1 by 2021. Revenue from oil has made this reduction in poverty possible. According to the Economist, Guyana could become the second largest oil producer in Latin America behind Brazil.

The smallest country in the region by population and land is Suriname. The former Dutch colony and Venezuela are the only two countries in South America that are expected to not achieve SDG 1 by 2030. One of every five inhabitants in Suriname has less than $1.90 a day and half of the population lives on less than $5.50. In the case of Suriname, poverty is expected to fall by around 15% by 2030 across all three poverty thresholds.

Peru and Bolivia

Peru and Bolivia are succeeding in their fight against poverty. Peru has already achieved SDG 1 and Bolivia is expected to follow in 2030. Bolivia is the only lower-middle-income country in South America while Peru is classified as an upper-middle-income country. However, both countries have large parts of their population living on less than $3.20 per day (around 10%) and less than $5.50 (roughly 24%). The share of the population under the $3.20 per day threshold is expected to decrease by 36% in Bolivia and by 54% in Peru over the next ten years. Bolivia is expected to reduce the proportion of population with less than $5.50 a day by 30% whereas Peru is expected to achieve a decrease of 42%.

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Argentina and Paraguay

Less than 1% of the populations of both Argentina and Paraguay are living on less than $1.90 per day. However, considering that Argentina is a high-income country and Paraguay a middle-income one, it is worth mentioning that roughly 4.5% of Paraguayans and 2.5% of Argentinians have less than $3.20 per day to spend. These figures are expected to halve in both countries over the next decade.

Chile and Uruguay

Chile has the highest GDP per capita in South America with $24,500 (2017 PPP) but has a larger share of its population living on less than $5.50 per day compared to Uruguay, which is second in the continent in terms of GDP per capita with $22,400. Both are classifiend as high-income countries. In Uruguay, 2.3% of the current population is below the $5.50 threshold. By 2025, this number is expected to decrease to just 1% of Uruguay’s population making Uruguay one of the countries with the lowest poverty numbers worldwide. Chile on the other hand currently has over 6% of its population under this threshold and is expected to have less than 3% by 2030.

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High-income countries ($ GNI per capita 2017): Uruguay, Chile, Argentina
Upper-middle-income: Brazil, Peru, Ecuador, Colombia, Paraguay, Suriname, Guyana
Lower-middle-income: Bolivia


*The latest available information from Venezuela is from 2015, when it was an upper-middle-income country.

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