Wednesday, 08 June 2022 21:16

Poverty in Central America will increase by 1%: ECLAC

Written by Evelyn Alas

The global inflation crisis will leave a balance of increased poverty in Central America in the current year 2022, according to a report by the Economic Commission for Latin America (ECLAC).

The impact of the increase in food prices will push the total poverty index to grow between 0.9% and 1.5% in Central American countries, if four percentage points are added to inflation expectations for the first quarter, according to the report Repercussions in Latin America and the Caribbean of the war in Ukraine.

In El Salvador, this indicator would reach 27.4%, up from 26.4% last year, while Costa Rica will end the year with 22.3%, up from 21.1% in 2021. Honduras remains in first place in Central America as the nation with the most widespread poverty, since this year it will cover 57.3% of its population, an increase of 1.10%. Guatemala will be second, with 50.5%, as it will increase by 0.9%. Nicaragua will suffer the greatest deterioration of its population in economic vulnerability, as it will go from 45.3% seen in 2021 to 46.8%, an increase of 1.5%, ECLAC said.

Panama will reduce poverty by -0.4%, from 21.6% to 21.2%. Not only is Panama the only country in the isthmus that will improve with respect to last year, it will also displace Costa Rica as the country with the least severe index. Poverty in Latin America will go from 32.1% to 33% according to ECLAC's base scenario, which contemplates adding two percentage points to inflation expectations for the first quarter of the year, but could increase to 33.7% if two more percentage points are added.

ECLAC highlighted that the increase in food prices not only affects the poorest population, but also the middle and lower middle strata of the income distribution. Likewise, El Salvador and Panama are in the most delicate situation in the isthmus, as they are in deficit in the food trade balance, the former with a US$1,024 million imbalance, and the latter with US$-2,857 million.