Monetary poverty in Mexico will decrease: World Bank

The World Bank projects monetary poverty using the $6.85 a day poverty line (2017 PPP) to decline from an expected 28.9% in 2023 to 28.7 and 28.2 in 2024 and 2025, respectively.

But overall, poverty and inequality are persistent in Mexico.

In 2020, the poverty rate was 43.9 (official multidimensional poverty measure) and 52.8 (monetary component).

Progress toward poverty reduction has been limited and has recently been reversed due to the recent crises.

For example, multiple social deprivations worsened, including deprivations in access to education, health services and food security.

Southern states and rural areas show higher social deprivations, with Chiapas and Guerrero having the highest poverty rates in 2020, at 66.4 and 75.5 percent, respectively.

Between 2016 and 2020, the average income of the poorest 40 percent grew by only 0.7 percent, as did the median income (0.68 percent), according to the World Bank.

Income inequality remained high at 45.4 Gini points in 2020, but declined from 2016.

As the Mexican economy grew at 3% in 2022, participation rates continue to recover and unemployment rates remain low.

Monetary poverty

Between Q4 2019 and Q4 2022, 3 million new jobs were created.

However, inflation eroded some of these positive effects.

Year-on-year inflation was 7.82% in December 2022, driven by high food and energy prices.

In particular, food inflation was 12.52, disproportionately affecting the poorest and most vulnerable, as they spend a larger share of their budget on food staples.

Working poverty, defined as the proportion of the population with labor income below the food poverty line, increased from 38.9% in Q4 2019 to 46% at the peak of the pandemic, in Q3 2020; but rebounded to its pre-pandemic level to reach 38.5% in Q4 2022.

However, job quality did not recover as quickly, as the share of jobs earning minimum wage or less was 21% before the pandemic (Q4 2019) and 28% in Q4 2022.

By the end of 2022, the share of informal employment is very high (55.8 in Q4 2022) and in line with its pre-pandemic levels.