Poverty and Inequality

While income differences persist across countries, income inequality has been decreasing across the region as a result of widespread poverty reduction.

Over the last decade, several countries have managed to reduce poverty and improve median livings standards—most notably Argentina, Uruguay and Costa Rica where over 50% of population can be classified as middle class ($10-50/day). Brazil, Peru and Colombia have also made significant gains, doubling the size of its middle class to over 30% of the population. In contrast, many countries in Central America such as Guatemala and Honduras have struggled in lifting its population toward higher and more sustainable income levels. This suggests that while large parts of the region’s population managed to escape extreme poverty, many remain at low and vulnerable income levels.

Yet, inequality remains high in many countries. In Chile, for example, the incomes of the richest 10% are still more than 25 times those of the poorest 10%, while in Brazil, the income gap between the top and bottom deciles is about 5 times that of advanced economies—illustrating that most countries still have a long way to go to ensure widespread social progress.