WHAT is it to be poor in Peru? Gonzalo Sánchez, a single father with health problems who is a part-time lecturer at a public university with a son studying to be a designer, often can’t afford an evening meal. Manuela Cuevas makes ends meet thanks to her retired husband’s odd jobs and her live-in son-in-law’s income as a manager at a security firm. Gina Palomino, her husband and their three children scrape by on his income from occasional building work and her street-corner sales of fruit, interrupted now that she is pregnant. Their names are not real, but their situations are. So are the tens of thousands of farmers whose crops were not insured and were lost to flooding last year. As these cases show, crossing the poverty line in either direction depends on countless details of circumstance.
In this century, Peru has been spectacularly successful in reducing poverty, more so than any other country in Latin America, according to the UN. The share of the population that is poor fell from 55% in 2001 to 21% in 2016, according to the national statistics institute, which defines poverty as a monthly income per person of less than 338 soles ($103). Most of this decline was due to rapid economic growth, though recently better social programmes have helped. But it has come to an end: in 2017 the poverty rate rose again to 22%, meaning that 375,000 more people are poor.
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That is true across the region. Between 2014 and 2017 the average poverty rate in 18 countries tracked by the UN Economic Commission for Latin America and the Caribbean edged up from 28.5% to 31.7%. True, most of this was because of a recession in Brazil and a slump in Venezuela. But for the time being, the years of rapid social progress in Latin America are over.
The best antidote would be much faster economic growth. Though much derided, the “trickle-down” effect of growth on poverty is real. In Peru’s case, creating social consent for big mining projects would help a lot in the short term. The foreign exchange and tax income they provide gets recycled in the form of increased demand for services that employ the unskilled. But for both Peru and the region as a whole, boosting productivity and diversifying the economy are vital for cutting poverty over the medium term.
There are other things policymakers need to address. Large numbers of the emerging lower-middle class remain vulnerable to changes in personal or national circumstances, such as last year’s floods in Peru. Poverty has many dimensions, apart from income, as many governments now recognise. They include poor health, housing and education, lack of training and child-care facilities, dangerous neighbourhoods and inadequate public transport. All of these may stand between urban Latin Americans and a secure, well-paid job.
In Peru, rural poverty has fallen dramatically, thanks to better communications, as Richard Webb, a former president of the central bank, has pointed out. Decentralisation has given small-town mayors money to build or improve roads. The spread of mobile phones has connected peasant farmers to markets. But these effects may have slowed: 70% of Peru’s poor still live in towns of less than 20,000, and half depend on agricultural income, as Carolina Trivelli, a former social-development minister, has noted.
The World Bank found, in a study published in 2015, that some 130m Latin Americans had remained stuck in poverty throughout the previous nine years despite faster economic growth. These chronically poor tend to be in remote rural areas or on the periphery of cities. Their poverty is especially “multi-dimensional”. Alleviating their situation requires well-targeted public policies.