The World Bank maintained Peru's growth forecast at 3.8% for 2019, according to its latest semiannual report "
Effects of the Business Cycle on Social Indicators in Latin America and the Caribbean: When Dreams Meet Reality."
According to the publication, Peru will be the fastest-growing economy among the
Pacific Alliance member states.
Guyana will lead growth in South America (4.6%), followed by Bolivia (4%), Peru (3.8%), Paraguay (3.6%), Chile (3.5%), Colombia (3.3%), Brazil (2.2%), and Surinam (2.0%).
Next come Uruguay (1.8%), Ecuador (0.1%), Argentina (-1.3%), and Venezuela (-25%).
Latin America
The three largest economies in the region —Brazil, Mexico, and Argentina— are expected to have weak or negative growth in 2019, while Venezuela's GDP is expected to fall a further 25%.
South America grew 0.1% in 2018 and is expected to grow by only 0.4% in 2019. Central America grew 2.7% in 2018 and is expected to grow 3.4% in 2019, while the Caribbean grew 4.0% in 2018 and is expected to grow 3.2% in 2019.
The weaker economic growth is having a predictable impact on social indicators. Brazil saw an increase in monetary poverty of approximately 3 percentage points between 2014 and 2017.
However, it is important to distinguish between cyclical effects on social indicators and structural effects.
Cyclical factors have a large impact on unemployment rates, while structural factors are much more important for indicators on unsatisfied basic needs like housing, education, and sanitation.
In the current difficult environment, redistributive policies are all the more important.
Most of the countries in the region already have sophisticated conditional cash transfers systems aimed at reducing long-term (and inter-generational) poverty by providing cash in exchange for investments in health and education.
More programs like unemployment insurance could also go a long way towards helping limit the rise in poverty during economic downturns.
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Published: 4/5/2019