Understanding the Poverty Impact of the Global Financial Crisis in Latin America and the Caribbean

Any time there is an economic crisis; there is the very real potential that its consequences for human welfare will be severe. Thus when the developed world plunged into such a crisis in 2008 and growth rates in Latin America and the Caribbean (LAC) began to plummet, fears rose that the region will suffer rising unemployment, poverty, malnutrition, and infant mortality, among other things. This study confirms and quantifies many of the sobering links between crisis and poverty, but it also shows how powerful good policy in stable times is in attenuating those links. It thus underscores the need for sound growth policies, good macro prudential care, fiscal balance, low debt, reasonably flexible exchange rates, and the like to help prevent and manage crises. It equally shows how effective social protection responses built on adequate existing programs can be. This study documents the effects of the 2008-09 global financial crisis on poverty in 12 countries in the LAC region, and it comes away with six big picture messages, each with much nuance and many caveats that are explained briefly in this overview.