World Bank raises Peru's 2021 GDP forecast to 11.3%

According to figures from the multilateral organization, Peru will lead economic growth in South America by the end of 2021, followed by Chile (10.6%), Colombia (7.7%), Argentina (7.5%), Bolivia (5.5%), Brazil (5.3%), Paraguay (4.3%), Uruguay (3.4%), and Ecuador (3%).

In its latest report, the World Bank estimates that Peru will expand 3.2% next year and 3% in 2023.

Additionally, it said that Latin America is projected to grow 6.3% in 2021, thanks to advances in vaccination plans and a widespread decline in the death toll. However, it issued a warning about an increase in poverty.

“The scars from the COVID-19 crisis will take years to fade if countries in Latin America and the Caribbean do not take immediate steps to boost a lackluster recovery from the pandemic, with poverty now at its highest level in decades, according to a new World Bank report, “Recovering Growth, Rebuilding Dynamic Post-Covid Economies Amid Fiscal Constraints,” the World Bank said in a press release.

“Although regional growth is projected to recover at 6.3% in 2021, with vaccination accelerating and COVID-19 deaths falling, for most countries it will fail to completely reverse the 6.7% contraction last year. Furthermore, growth forecasts for the next two years sink to below 3%, returning to the low growth rates of the 2010s and fueling fears of another Lost Decade of development,” it added.

According to the report, to generate the kind of growth rates that would move the region forward and lessen social tensions, the region needs to urgently implement long delayed but feasible reforms in infrastructure, education, health, energy policy, and innovation, as well as tackle new challenges posed by climate change.

"Countries in the region made enormous efforts to help families in the midst of the pandemic. Now, the challenge is to generate a robust recovery which provides job opportunities and heals the wounds of the crisis," said Carlos Felipe Jaramillo, Vice President for Latin America and the Caribbean at the World Bank.

The report states that any recurrence of the virus will hit growth, while persistent global inflationary pressures could lead to higher borrowing rates, depressing demand. 

“Efforts to mitigate the effects of the crisis triggered hefty spending increases, leading to higher deficits and public debt,” said William Maloney, Chief Economist for Latin America and the Caribbean at the World Bank.

“Given the imperative to stimulate more dynamic, inclusive and greener growth within this context of scarcer resources, governments will need to rethink how efficiently and how well they spend public resources,” he added.

(END) CAN/RMB