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Paraguay maintains upper-middle-income status amid poverty reduction
🇵🇾 Paraguay /Culture & Society

Paraguay maintains upper-middle-income status amid poverty reduction

From ABC Color · () Spanish

Translated from Spanish, summarized and contextualized by DistantNews.

At a glance

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  • Paraguay has maintained its status as an upper-middle-income country, a classification by the World Bank awarded over a decade ago.
  • This classification reflects sustained income growth over 25 years, significantly reducing poverty from 57.7% in 2002 to an estimated 18% currently.
  • Economists urge a policy shift from poverty reduction to addressing the needs of the growing 'vulnerable population' segment, who earn $2.5 to $14 daily.

Paraguay has held its 'upper-middle-income country' status, a designation from the World Bank granted more than a decade ago, reflecting significant economic progress. Economist Manuel Ferreira, former Minister of Finance, explained that this classification evolves with national income levels. Over the past 25 years, Paraguay has seen sustained income growth, lifting a substantial portion of its population out of poverty.

Paraguay has been evolving over the last 25 years, raising its income levels in a fairly sustained manner, we have lifted many people out of poverty.

— Manuel FerreiraExplaining Paraguay's economic progress and poverty reduction.

Ferreira noted that the poverty rate, defined by daily incomes below $2.5, has fallen dramatically from approximately 57.7% in 2002 to an estimated 18% today. Those who exit poverty move into the 'vulnerable population' category, earning between $2.5 and $14 daily. While this group's numbers have also decreased, the reduction has been slower than desired.

The World Bank updates country classifications annually on July 1, based on the previous year's Gross National Income (GNI) per capita. When Paraguay joined the upper-middle-income group in 2014, the GNI per capita range was $4,126 to $12,735. For 2025, these thresholds have risen to between $4,636 and $14,375.

The classification of the World Bank (for each country) changes according to income levels.

— Manuel FerreiraDescribing how countries are categorized by the World Bank.

Despite the positive trends in poverty reduction, Ferreira expressed concern that government policies remain focused solely on lifting people out of poverty. He argued that strategies must adapt to the current demographic reality, where the vulnerable population is now larger than the impoverished one. "The policies needed when you have 57.7 percent of the population in poverty are not the same as those needed when you have 18 percent," he stated, emphasizing the need for improved healthcare and other services for the vulnerable segment.

The policies needed when you have 57.7 percent of the population in poverty are not the same as those needed when you have 18 percent.

— Manuel FerreiraArguing for a policy shift to address the needs of the vulnerable population.
DistantNews Editorial

Originally published by ABC Color in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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