Latin America’s Middle Class Grew by 50 Percent Over Last Decade: World Bank

Rapid economic growth in Latin America, backed by more inclusive social and economic policies, has seen the region’s middle class grow by nearly 50 percent over the last decade, said a World Bank report released on Tuesday, with the size of the region’s middle class population now rivalling the number of poor people for the first time in its history.

Rapid economic growth in Latin America, backed by more inclusive social and economic policies, has seen the region’s middle class grow by nearly 50 percent over the last decade, said a World Bank report released on Tuesday, with the size of the region’s middle class population now rivalling the number of poor people for the first time in its history.

The report, called “Economic Mobility and the Rise of the Latin American Middle Class’’, found that the middle class in the region had grown to an estimated 152 million (30 percent of the total population), compared to just 103 million in 2003.

The report added that the countries that experienced the greatest growth in its middle class were Brazil, which comprised about 40 percent of the region’s middle class growth; Colombia, where 54 percent of people improved their economic status between 1992 and 2008; and Mexico, which had 17 percent of its population join the middle class between 2000 and 2010.

Related: 35 Million Brazilians Escaped Poverty Over Last Decade: Study

Related: Brazil Plans Free World Cup Tickets for Poor

“This is not a statistical anomaly. It is a significant reduction in inequality,” told World Bank regional chief economist, Augusto de la Torre, to an online press conference, as cited by The Guardian.

“The recent experience of Latin America and the Caribbean shows the world that policies balancing economic growth while still expanding opportunities for the most vulnerable can spread prosperity to millions of people,” added World Bank President Jim Yong Kim in his press statement.

[quote]”Governments in Latin America and the Caribbean still need to do much more – one third of the population is still in poverty – but we should celebrate this achievement of growing the middle class and learn from it,” Kim later said.[/quote]

The bank defined the middle class as anyone making between $10 and $50 per day. This group, said the bank, faced less than a 10 percent chance of falling back into poverty; though 38 percent of Latin America’s population was still considered to be “vulnerable” – as they lived just above the poverty line on an income of between $4 and $10 a day.

“We in Latin America must not sing victory yet because it has been accompanied by very strong tail winds in the last few years, very favourable international conditions,” warned De la Torre.

[quote]”If they (economic conditions) become much less benign, we must be particularly vigilant to pursue policies that preserve what we have gained,” he added.[/quote]

According to the report, social mobility also remains limited in the region, while the economic and social background of parents still played a role in determining the economic future of their children.

As such, the Bank urged governments to create a “fairer and more legitimate social contract” for its population, in order to ensure that new middle class would not opt out of public services that would, in turn, reduce opportunities for the poor to move upwards.

“When you look at the entire world, the data are consistent with the idea that larger middle classes are good for institutions. But when you do the same studies for Latin America, you don’t encounter that evidence,” De La Torre said, as cited by the Financial Times.

[quote]“Better-off Latin American opt out of public health systems by buying private health insurance. They opt out of public security services by paying private guards – typically sitting in a makeshift hut on the street, collecting monthly payments from residents. They even opt out of public electricity services by buying their own generators… The middle class tends to opt out, so the quality of public services becomes even worse.”[/quote]

Related: Rich Less Likely To Donate To Charity Than Middle Class: Study

Related: Brazil: Poor Education System Major Economic Problem