UPDATE 1-Peru poverty rate falls 2 points as Humala inches toward goal

Wed May 8, 2013 8:49pm EDT

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LIMA May 8 (Reuters) - Peru's poverty rate fell 2 percentage points to 25.8 percent last year as President Ollanta Humala inches toward his goal of halving the number of poor by 2016 in one of Latin America's fastest-growing economies.

A study released by the government statistics agency INEI on Wednesday showed poverty is still higher in rural areas, at 53 percent, than in cities, at 16.6 percent.

But, in a positive sign, poverty in rural provinces is now dropping twice as fast as in cities. The poverty rate fell 3 percentage points in rural areas last year while in cities it declined 1.4 points.

Some policymakers have traditionally worried that economic growth mainly benefits the urban poor before the rural poor, and the new data suggested a shift was under way.

Peru, a major producer of copper, gold and silver, has experienced a decade-long economic boom fueled in large part by mining, but millions of poor Peruvians have been left behind.

Peru's rural areas are changing as foreign and domestic companies seek to tap an emerging class of consumers in towns with plenty of room for growth.

Richard Webb, a former president of Peru's central bank, said in a March study that rural poverty is dropping in part because new roads and better telecommunications have linked people to markets.

He said the change started about five years ago and is especially noticeable when economists track growth in rural income, which can be a more accurate measure than poverty.

Peru's economy has grown around 6 percent a year for the past decade, but government services in rural areas have lagged.

Economists say another decade of strong economic growth is needed to slash poverty to levels seen in developed economies. Critics say Humala needs to do much more to reach his goal.

He assumed office when the poverty rate was around 30 percent and promised to cut it to 15 percent by the end of his term in July 2016.

A former leftist military officer, Humala has promoted foreign investment while emphasizing a series of social programs aimed at helping the poor through cash transfers, support for pensioners, scholarships and school meals.

While half a million people moved out of poverty last year, Peru, an Andean nation of nearly 30 million, is still home to 7.8 million people living in poverty - 1.8 million of whom live in "extreme poverty" and cannot cover basic food purchases.

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