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Covid shockwaves brought poverty in Latin America to a new Nadir

(Bloomberg) – The Covid-19 pandemic has sparked a wave of poverty in Latin America, exacerbating declines that began in the past decade and plunging millions of people into extreme poverty. 22 million people – the equivalent of everyone in New York State – join the ranks of the poor from 2019 to 2020, unable to meet basic needs. In total, about a third of the approximately 600 million people in Latin America live in poverty or what the United Nations defines as extreme poverty: living on less than $ 1.90 a day. due to the intensity of the pandemic and the severity of its recession, the worst in two centuries. The region accounts for around 30% of Covid-19 deaths globally, despite having only 8% of its population. Its economy contracted 7% last year, more than double the decline of any other region. The crisis is distorting societies large and small. A huge library and cultural complex in Rio de Janeiro has become a besieged and besieged soup kitchen. In Bogota, idle musicians serenade the wealthy, who toss bags containing small bills with a coin or two for ballast at them as they fall from the balconies of luxurious apartments. In Mexico City, even lawyers resort to pawn shops. Workers who have achieved precarious stability find themselves unemployed. People working in the large informal sector find that traditional networks of casual employment are disrupted. For the unlucky ones, life is reduced to a constant search for food: in Calle Monte de Piedad in Mexico City, lawyer Juliana Ortega Aguilar, 36, waited in front of the charity that gives her name to the street. This centuries-old institution was founded to provide affordable loans to the poor. Inside, Ortega’s mother was pledging jewelry; the legal office where her husband works has closed amid the pandemic. Ortega said few cases are coming to his own desk. “We are a house full of lawyers, but there is no work,” Ortega said. “We all have to pay a rent or a mortgage, the electric bill and even if the kids don’t go to school, they have to eat and they get sick.” Across the region, people who have reached the middle class are After years of renting in La Plata, Argentina, Romina Bravo, 44, and her husband in 2017 bought a three-bedroom house where Benicio, 7 years old, and Valentino, 14, could grow up. They took out a government-promoted mortgage with payments linked to inflation, which was supposed to go down, but it skyrocketed, due to a lack of confidence in the peso and failed government controls. prices. Bravo lost his job at the bank for 22 years just before the pandemic, and his new job as a court administrator pays the equivalent of about $ 320 a month, a fraction of his previous salary. A mortgage payment freeze has just expired. Bravo put the house up for sale in March. “It’s either I eat or I pay,” Bravo said. “I hope for help. Otherwise, I’ll be the next kicked out. Latin America had made progress over the past decades. In 2019, half of its university-age population was enrolled in some form of higher education, up from 23% in 2000, according to Unesco. The middle class grew to 46 million households in 2018, from 33 million a decade earlier, Euromonitor estimated. Many countries have finally put an end to soaring inflation. Stable policies and currencies have paved the way for foreign investment and job growth. Brazil hosted the Olympics; Argentina held the G20 summit; Facebook CEO Mark Zuckerberg has chosen Colombia for its first international town hall. The region’s only dominant economic driver has always been the exports of raw materials such as soybeans, beef and metals. China’s demand for these materials, a catalyst for growth in the 2000s, is on the rise again, sparking prices and giving policymakers hope for growth. But governments remain heavily in debt – Argentina, Ecuador, Suriname and Belize have all restructured their sovereign debt amid the pandemic – and few have money for social spending that could keep citizens afloat . progress is unraveling. The region lost more than 34 million jobs during the pandemic and workers saw more hours reduced than in any other region, according to the International Labor Organization. Instead of reaping the economic reward from rising commodity prices, the poor often perceive them as soaring food prices. Millions of Venezuelans, fleeing a broken and mismanaged country, have spilled over into the region, adding acute challenges. Public anger is spreading: In the face of its worst contraction on record, Colombia is trying to contain its budget deficit and ‘avoid your credit rating. downgrades likely to drive up borrowing costs. This week, the government shelved a plan to raise taxes after deadly street protests. “This is really bad news everywhere. Unless there are serious changes in social protection structures in the region, the outlook is not bright, ”said Santiago Levy, a former senior Mexican official who is a senior researcher at the Brookings Institution in Washington. “There is going to be a long term loss of human capital.” In Mexico City, the pawn shops are filled with artifacts of a better life. People – most of whom never surrender their guarantees – have left engraved gold wedding rings, refrigerators and washing machines. On a recent visit, those in the historic city center donated video game consoles, GoPro-type cameras, hair straighteners and blood pressure devices. An employee said she even accepted a gold vial with a teaspoon that appeared to have been designed for cocaine. “The middle class is no longer the middle class,” said Erika Guarneros, who buys and sells gold at her family’s stall. “He basically became the poor class.” Many Latin American governments provide social assistance to those who do not have formal employment. At the same time, they are increasingly focusing taxes on businesses and wealthy citizens to fund these expenses. The researchers warn of a scenario where companies hire less, productivity declines, and highly skilled workers simply quit or look for jobs off the books to avoid taxes. Ultimately, governments lose revenue even as the demand for aid increases. “It’s a vicious circle,” says Agustin Salvia, research director at the Argentine Social Debt Observatory in Buenos Aires. “The trend is ultimately towards economic paralysis in terms of job creation, productivity and wages in the informal sector which are poorer.” The informal sector makes up at least half of the region’s workforce, with people finding jobs where they can, often for money. The crisis disrupted traditional labor markets: in Bogota, musicians for years used business cards and word of mouth to find stable work, and mariachi troops could be hired directly from the streets. But since the pandemic ended weddings and quinceaneras, affluent neighborhoods have been filled with wandering musicians playing everything from folk tunes to opera. The business of “balconeo,” or singing on balconies, did not exist 18 months ago, said Enrique Gutierrez, who plays a small guitar known as a cuatro. “We sincerely hope we don’t bother you,” Maryoris Cordero, the lead singer for her band, said from the empty windows of an upscale building, speaking through a small amplifier. The toll of a harp rippled through the neighborhood as they sang llanero songs from the cattle grazing plains. After six hours of walking and playing, each of the four group members usually won around $ 7. when those labor markets collapse. Harpist Elio Materan, who is married to maraca player Karla Rivero, said their 9-year-old daughter Karlieth was chained to their schedule. Materan said. “When she has virtual lessons, she stays with her mother and I go out with the other members of the group.” The likelihood of an underprivileged Latin American child graduating from high school fell by around 20 percentage points last year, the lowest level since the 1960s, according to University professor Nora Lustig by Tulane. Meanwhile, graduation rates for wealthy children have barely budged. “It’s a huge shock that could turn into a lasting scar,” Lustig said. Income recovers with economic growth, she said. Nowhere is replacing aspiration with despair more literal than in Rio de Janeiro’s Biblioteca Parque Estadual, the hub of a network of state libraries where thousands of people have come to collect books before. the pandemic. Today it is hosting a massive feeding operation: nearly 19 million Brazilians have gone hungry in the past year, according to food security researchers. This is almost double the amount the government says it was in this situation in 2018. In the beginning, the emergency payments helped a lot of people stay fed. But aid has been drastically cut – and halted completely in the first three months of this year – as President Jair Bolsonaro grapples with a worsening budget crisis. In Rio, the national human rights agency man distributes around 4,500 meals a day and manages the library site. The city’s poorest – the homeless, the elderly, sex workers, the mentally ill and the unemployed – crowd behind metal barriers before breakfast, lunch and dinner.Leonardo Bispo Dos Santos, 44, used to come to the library to watch movies and use the Internet. Then the furniture removal company where he worked went bankrupt. Now he comes to feed. “After breakfast, I’m heading straight for lunch,” he said as the line started to move on a recent Friday. “If you don’t get there early, you don’t eat.” For nearly an hour, the hungry climbed in front, and other agents arrived on motorcycles to restore calm. Bispo Dos Santos hugged aid workers and stuffed an aluminum container with rice and vegetables. beans in his backpack. “It’s survival,” he says. He walked to the back of the line to restart the cycle. For more articles like this, please visit us at Subscribe now to stay ahead with the most trusted source of business news. © 2021 Bloomberg LP

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