Sunday, June 4, 2023

Monetary poverty has decreased, but…

The Ministry of Economy, Planning and Development (MEPyD) has published the Official Bulletin of Monetary Poverty 2022, which includes the changes that have occurred since 2021 and has the particularity of applying the new official methodology approved in 2022 by the Inter-institutional Technical Committee for Poverty Measurement.

The results are encouraging given that there has certainly been an improvement, but they still do not resemble the pre-pandemic results, which is an indication that the lost time will require much more effort to recover.

In fact, the pandemic made 505,481 Dominicans poor, while in 2021 another 54,225 also crossed the line, which is related to the effects of inflation. The good news appears in 2022, as it represents the first to register reductions in general monetary poverty since the pandemic caused by covid-19 in 2020 and the subsequent increase in inflation in 2021.

This reduction is observed both with the 2012 methodology and with the new 2022 methodology. In this sense, with the new official methodology the general poverty rate for last year was 27.7% and decreased by 3.0 percentage points compared to 2021, which was 30.7%

Another positive variable to highlight, which is related to the economic recovery, although at a lower level than in 2021, is that the reduction in monetary poverty in 2022 was mainly driven by the increase in employment in the country, which exceeds the pre-pandemic figures.

In addition, it is opportune to highlight that the improvement in labor income is the most determining factor in the reduction of monetary poverty, despite the fact that inflation has reduced its impact. The data establish that more than 292,000 people were lifted out of poverty in 2022, increased their income, so they were able to purchase a basket of basic goods and services.

When analyzing the results shown, both measurement methodologies maintain the same behavior trend throughout the 2016-2022 series. In addition, this bulletin incorporates a new section that presents scenarios in which monetary poverty is estimated with or without different components of aggregate household income. This section indicates what the general monetary poverty would be with or without government monetary transfers.

Although it is not about assessing whether poverty has increased or decreased, this new methodology is a guarantee that the information collected will be closer to reality.


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