Why, according to INDEC, low poverty?
First, it must be understood that, as a result of political despair for showing encouraging data, the government has extracted from different entities poverty estimates monthly or quarterly, while the official source that is Indec does so semiannually. This dynamic has resulted in figures that seem disconnected from the daily reality that the majority of the population lives.
Where do we start?
Poverty is measured semiannually through INDEC, in its report “incidence of poverty and destitution in 31 urban agglomerates.” In the first semester of 2023, in full deterioration of the government of Alberto Fernández, the poverty index was 40.1%. In the second semester of the same year – already influenced by the electoral result and the strong adjustment of the new government in December 2023 – the figure climbed 41.7%. Recall that in the last 20 days of December there is the great adjustment accompanied by an increase in the exchange rate of 118% and a monthly inflation of 25.5%.
In the context of the deep adjustment of the Government of Javier Milei, the first semester of 2024 marked a leap to 52.9% poverty, which implies an increase of 11.2 percentage points on a basis that had already been impacted by measures of its management. However, in the data announced today corresponding to the second semester of 2024, the drop in the measurement is overwhelming and is located in 38.1%.
It is worth remembering that, during the government of Mauricio Macri, between the second half of 2016 and the second half of 2017, poverty fell from 30.3% to 25.7%, according to INDEC. However, he then reversed that trend with a sustained ascent. Therefore, a punctual decrease in poverty measurement after an adjustment is expected, but only a sustained fall in time – as the occurred between 2003 and 2013 – can be considered a consistent reduction.
How is poverty measured?
In Argentina, poverty is measured in a one -dimensional way, that is, under a single criterion: income. If a person exceeds a certain income threshold, it is not considered poor; If it is below, it is. This approach does not contemplate, for example, if someone wins over the threshold but lives without running water, in a sheet roof, or if it wins below the threshold but resides in a decent home with all services. Different international organizations recommend adopting a multidimensional measurement of poverty, which also contemplates housing, health, education and living conditions beyond income
In addition, as with other economic variables, this approach does not contemplate situations such as the one at the beginning of the Government of Javier Milei, when the strong jumps in the poverty levels pushed many low -income homes to borrow to survive. Even if later they manage to overcome the income threshold that classifies them as non -poor, those accumulated debts continue to condition their real economic situation, although they are not reflected in the official poverty measurement.
The threshold to define poverty is the cost of the total basic basket (CBT). If the basket used to measure inflation is unlikely, it will seem even more questionable. Food and non -alcoholic beverages represent a third of the total measurement, while housing with all services just 10%, health 6%, transport 9%, among other items.
As with the CPI, this basket has weights that are highly debatable. The incidence of public services, for example, is very low, even when they have increased on average about 400%. The usual response to this criticism is that “it was always measured like this”, but the big difference is that, previously, services, transport, fuel or rentals did not increase in such excessive proportions. For example, according to Indec himself, rentals grew more than double than inflation.
What data from the economy in 2024 could anticipate the level of poverty?
Since a significant proportion of salaries are also poor, the evolution of wages can be a good predictor of poverty. If we adjust the salaries on the IPC of INDEC, we observe that, Punta to Punta, they recovered with respect to the end of the management of Alberto Fernández. However, if we use the 2017/2018 basket – with more realistic weights for current consumption – wages not only did not recover, but lost more than 5% purchasing power.
As for the minimum retirement with bonus, which represents one of the most vulnerable stripes, a similar loss is observed: it failed to match its purchasing power with respect to 2023. In addition, the restriction in the coverage of medications is not taken into account, which implies a kind of decline of the “indirect retirement”. Not only medicines have increased more than the rest of the goods, but access to them, which is essential for retirees, suffered restrictions.
Unemployment did not help: while the last quarter of 2023 closed by 5.7%, the fourth quarter of 2024 climbed 6.4%. At the same time, together with labor demand, self -employed workers increased, which is usually the indication of more informal and precarious labor relations. Unemployment, in general, correlates with an increase in poverty, not with its reduction: if there are more people without work, there is usually more poverty.
With regard to mass consumption, the fall was loud: close to 14% per year according to the Scentia consultant. INDEC also shows in its measurements for supermarkets a sustained fall throughout the year compared to 2023. VAT collection – once linked to the level of consumption – also exhibits a decrease that reinforces this diagnosis.
At the macroeconomic level, the internal gross product (GDP) fell 1.7% in 2024. And although this figure seems moderate, it is because the agriculture was recovered after the historic drought of 2023. If agriculture and livestock are excluded, the fall is much more severe: trade and manufacturing industry retreated 7.3% and 9.2%, respectively.
Is it thanks to libertarian policies?
Although the decrease in poverty measurement could be considered, in appearance, as a positive fact, it cannot be attributed to libertarian policies. In fact, the main prices of the economy are strongly intervened: the exchange rate and the interest rate continue under state control. The exchange rate is still valid and allows to sustain an artificially low dollar. This, as happened in other stages of Argentine history, distorts indicators and generates “improvements” that can be mirages.
Only when state intervention on key variables is eliminated will be possible to assess whether liberal ideas can really generate prosperity in Argentina. Until now, they never succeeded.
Why does poverty go down according to Indec?
The key is how it is measured. Since a third of the total basic basket is made up of food and drinks, if inflation is partially contained in that area, an important part of the “statistical work” is already done.
The government released much of food importation, to the point of eliminating even historical health requirements such as food records. As a result, during 2024 food imports grew by 82%, including many mass consumption products. This external competition, after the first months of strong increases, helped the prices of food rise below the average of the economy. That, in terms of measurement, reduces pressure on poverty.
However, this statistical relief has a real cost: it affects national production and destroys jobs in the sector, an effect that can take to appear, but ends negatively impacting the economic framework.
On the income side, after the strong deterioration recorded in the first months of the Milei government, and partly thanks to the pressure exerted by the unions, during the second semester the wages began to recover a proportion of the lost.
Both factors – deceleration in food and partial income recovery – explain the decrease in the official poverty measurement. But all this is based on an artificially low exchange rate, which stimulates mass imports and can only be sustained with indebtedness. A strategy that is hardly sustainable in the long term.
What can we wait for the future?
If the Government obtains external financing – mid -indebtedness – to support a low exchange rate and an importing opening (especially in food), poverty may continue to descend for some more semesters. But this does not mean that the quality of life improves or that the decline is sustainable. In fact, the opposite could be happening.
Nothing would be more encouraging for those who want the eradication of poverty than to see a trend sustained down. However, in the light of all analyzed indicators, this reduction seems more A statistical illusion that a real improvement.
*By Guido Agostinelli, economist, member of Fundus and author of “Libertarian experiment”
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