Argentina Poverty Rate Declined in First Half -- Update

The percentage of Argentines living in poverty fell to 28.6% in the first half of 2017, indicating that President Mauricio Macri's economic policies have begun benefiting lower-income families.

The figure reported by the statistics agency Thursday is down from 30.3% in the second half of 2016 and 32.2% in the second quarter of that year, when the government started formally measuring poverty.

"The government's economic policies are working" said Martín Gonzalez-Rozada, an economist at Torcuato Di Tella University. "Reducing poverty is a long process and the government is moving in the right direction."

Argentina's government stopped measuring poverty under Mr. Macri's populist predecessor, Cristina Kirchner. Still, Mrs. Kirchner claimed, without presenting any evidence, that fewer than 5% of Argentines were poor. Her economy minister said measuring poverty was "stigmatizing" to poor people.

But independent research by the Catholic University of Argentina indicated that poverty rose during each of Mrs. Kirchner's last four years in office, ending at 29% in 2015.

Mr. Macri has made reducing poverty his top priority, saying that if he fails to do so his presidency would be a failure.

Immediately after taking office in December 2015, Mr. Macri prescribed a series of painful economic measures, including a steep currency devaluation that led prices to surge. Inflation surpassed 40% and roughly 1.5 million people fell into poverty, according to the Catholic University.

But after an initial setback, Mr. Macri's "no pain, no gain" approach is now paying off. Private sector investment is rising and jobs are being created. Purchasing power is also on the rise as wage increases outpace the inflation rate, says Gabriel Zelpo, chief economist at research firm Elypsis. That, in turn, is boosting consumer spending.

Argentina's economy had a 4.9% year-over-year expansion in July, its fastest pace in more than two years.

Mr. Macri's pro-business policies and approach to poverty are markedly different from those of his populist predecessor, Cristina Kirchner. Mrs. Kirchner's government stopped measuring poverty while she claimed, without presenting any evidence, that fewer than 5% of Argentines were poor. Her economy minister said measuring poverty was "stigmatizing" to poor people.

The controversy over Argentina's poverty rate may have affected Argentina's presidential election in 2015, with pollsters saying that skepticism over government data helped get Mr. Macri elected. Now, with a key midterm election approaching next month, the declining poverty rate could favor allies of Mr. Macri who are running for Congress.

"I think poverty will keep declining," said Mr. Gonzalez-Rozada. "I don't think it'll fall very quickly, but the government is on the right path."

Alberto Messer

contributed to this article.

Write to Taos Turner at taos.turner@wsj.com

(END) Dow Jones Newswires

September 28, 2017 19:11 ET (23:11 GMT)