1. Understanding Poverty
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LAC Equity Lab: Poverty - Forecast and Nowcast

In 2024, poverty in Latin America and the Caribbean (LAC) fell to its lowest level this century, with one in four people living below the upper-middle-income-country poverty line of US$8.30 per person per day (2021 PPP). Microsimulations results indicate that LAC poverty will continue to decline up to 2027.  The World Bank has partnered to forecast and nowcast poverty in LAC using the latest harmonized household surveys from the Socio-Economic Database for Latin America and the Caribbean (SEDLAC) and macroeconomic projections.

The Poverty Forecast and Nowcast dashboard presents microsimulation results conducted in Fall 2025 to estimate poverty and inequality rates from 2022 to 2027 and from 2022 to 2024, respectively. These estimates use the World Bank’s international poverty line of $3.00 per day (2021 PPP), the upper-middle-income and lower-middle-income poverty lines of $8.30 and $4.20 per day (2021 PPP), respectively. In addition, the Gini index is included to provide statistics on inequality at both regional and country levels.


For the poverty calculations, incomes are aggregated at the household level. The procedure is as follows: all individual incomes from members of a particular household are added together to calculate aggregate income for that household. Then, this aggregate income is divided equally amongst the members of the household. This is known as Per Capita Household Income (PCHI). Next, the PCHI is compared to a given poverty threshold (poverty line), for example, $8.30 per day. Those individuals with income lower than the poverty line are considered poor, while those above are not. This definition implies that all the members of the same household will share the same poverty level.


The most common measure of inequality is the Gini coefficient. It is based on the Lorenz curve, a cumulative frequency curve that compares the distribution of a specific variable (for example, income) with the uniform distribution that represents equality. To construct the Gini coefficient, graph the cumulative percentage of households (from poor to rich) on the horizontal axis and the cumulative percentage of income (or expenditure) on the vertical axis. The Gini captures the area between this curve and a completely equal distribution. If there is no difference between these two, the Gini coefficient becomes 0, equivalent to perfect equality, while if they are very far apart, the Gini coefficient becomes 100, which corresponds to complete inequality.

The SEDLAC (CEDLAS and WB) harmonization is an effort to increase cross-country comparability. However, methodological changes in the underlying surveys may result in non-comparable data that the harmonization process cannot fully solve. It is important that the user know what data is and is not comparable. For more information, visit the comparability dashboard.

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