Latin America’s new poor

WHEN THE pandemic struck Piura, a city in northern Peru, Daniel Zapata had a part-time job with a market-research firm. The 250 soles ($70) he earned each month paid his fees for a three-year course in business administration. The covid-19 recession put paid to all that. The firm closed, and Mr Zapata, who is 20 and lives with his parents and a sister, has dropped out of his course. The family received 760 soles in emergency aid from Peru’s government. With the lockdown over, they must now rely on his sister’s income as a teacher and his father’s pension from his years working in a textile factory. Having lived in the lower tier of the middle class, Mr Zapata is staring into the abyss of poverty. He expects little from a general election next April. The politicians “just squabble instead of working”, he says.

The covid-19 recession is wiping out years of progress in Latin America in reducing poverty and inequality. Economists are starting to map just how big the social impact of the pandemic is. Many governments imposed long lockdowns. These hit the half of Latin Americans who work in the informal economy especially hard. Many countries, like Peru, offset part of the lost income by expanding aid programmes for the poor. That has helped, but not enough, and the effort may not be sustainable.