The first South American country to join the OECD, Chile is one to the fastest growing Latin American economies. But despite making considerable progress in reducing poverty, inequality is still a massive challenge needing to be faced.
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Average Latin America and Caribbean Growth Down to 0.8 Percent This YearAbsent Structural Reforms, Future Growth May Remain LowLesson Learned: Domestic Saving Can No Longer Be OverlookedWASHINGTON, Ap... Show More +ril 15, 2015 – With China growing at a more moderate pace and commodity prices stabilizing at lower levels, Latin America and the Caribbean will need to adapt to a “new normal.” Average GDP growth in the region, slowing down steadily and sharply since 2011, is expected to reach only 0.8 percent this year, and may remain at low rates in the future unless ambitious pro-growth structural reforms are adopted. A boost in savings, which would need to be a key ingredient in a pro-growth agenda, would also help rebuild monetary and fiscal policy maneuvering space.In its latest semiannual report, “Latin America Treads a Narrow Path to Growth: The Slowdown and its Macroeconomic Challenges,” the World Bank´s Office of the Chief Economist for Latin America and the Caribbean forecasts a fourth year of slow growth for the region. The report concludes that the strong growth of the 2000s is not likely to revisit the region, unless vigorous pro-growth reforms are adopted. “The evidence suggests that the external shocks emanating from China’s deceleration and terms of trade changes are permanent,” said Augusto de la Torre, World Bank Chief Economist for Latin America and the Caribbean. “In the absence of growth-friendly structural reform, this situation firmly points in the direction of an also permanent growth slowdown for the region, with rates that would be insufficient to support significant social progress.”Beyond averages, the region continues to tell a widely diverse story. Commodity exporting countries in South America are growing at a much slower pace than commodity importers in Central America and the Caribbean. Especially hurting among the exporters is Venezuela with its economy expecting to shrink again by 5 percent in 2015. Also in negative territory would be Brazil and Argentina, countries with very different realities but both pulling the regional average down due to their larger size. This year the slowdown is expected to hit other South American commodity exporting countries, such as Bolivia, Colombia and Ecuador, which had delivered relatively strong growth through 2014. Meanwhile, commodity importers in the region are benefitting from lower prices and will see growth in 2015 above the regional average, with particularly strong growth rates expected for Panama, Nicaragua, and Dominican Republic. Mexico, benefitting from the US recovery, is expected to grow this year also above the regional average.The report, issued ahead of the World Bank Group and IMF Spring Meetings, finds that Latin America and the Caribbean decelerated more than all other emerging regions. This reflects the amplification effects of an unusually strong decline in investment among commodity exporting countries in the region.In this less favorable external environment, leaders in Latin America are facing diverse policy response options to stimulate their economies. Commodity importers, such as the countries of Eastern Caribbean, will have an easier path given lower commodity prices and U.S. economic recovery. Commodity exporters with little exchange rate flexibility will likely face a much harder time, as the transition to the “new normal” will have to rely on a significant reduction in aggregate spending.“Hindsight is 20/20. But we can say now that both the private and public sectors in many countries in the region interpreted the change in the external environment, and hence the nature of the deceleration, as transitory. This resulted in continued expansions in spending even as income growth was declining, which ended up reducing monetary and fiscal maneuvering space,” said de la Torre. “Looking forward, it is now clear that adopting policies to stimulate savings will be important to strengthen the foundations for growth and macroeconomic stability. This is a tall order that will take time, but it will show that we learned from our experiences.” Currently, Latin America’s savings rates stand at about 10 percentage points below Asia’s. According to the report, higher saving rates would provide more breathing space for both monetary and fiscal policy. In addition, there is increasing evidence that savings can promote growth by both underpinning a more depreciated real exchange rate, and reducing the dependency on foreign savings. Both, in turn, would boost external competitiveness, and reduce the cost of capital, respectively, enhancing the sustainability of growth. The evidence shows that countries that save more, have more competitive exchange rates, export more, and grow more.Learn more about the work of the World Bank in Latin America and the Caribbean: www.worldbank.org/lac Visit us on Facebook: http://www.facebook.com/worldbankBe updated via Twitter: http://www.twitter.com/BancoMundialLAC For our YouTube channel: http://www.youtube.com/lacregion2010 Show Less -
A world away, a similar story plagued the citizens of Bangkok. Pensri, a street vendor who made a living selling food to passing motorists, felt the daily sting of pollution.“There was a lot of black ... Show More +smoke. Back in those days my health wasn’t quite good,” Pensri remembers from Bangkok in the 1970’s when she started working outside. Bangkok took on similar measures with similarly uplifting results. Adopting emission standards, phasing out lead in gasoline and reducing polluting rickshaws in the streets, Bangkok’s interventions have positively impacted the lives of residents.“The air quality wasn’t good but now it’s better,” says Pensri. “I feel comfortable and healthy because there is less exhaust smoke. I am in good health now that the atmosphere is improving.”Bangkok also encouraged a conversion to cleaner four-stroke engines for the city’s motorbikes, a mainstay for the transportation system in the city.“After changing to the four-stroke engine, I feel much better,” comments Thangpoon Nawimarnm a moto-taxi driver and bike messenger for 20 years. “I think [the air] has improved since changing to the four-stroke engine and it’s good for people to be able to breathe easily.”The interventions in Bangkok and Santiago make one thing clear: taking action on air pollution can bring real change to the lives of residents, even as the cities continue to grow.The UN projects that by 2050 the population in urban centers will increase by 2.5 billion people with 90 percent of the increase concentrated in Africa and Asia. With greater urbanization, comes the risk of greater pollution. But the rapid urban growth also provides an opportunity to implement policies and infrastructure to curb toxic sources of pollution, as they did in Chile and Thailand. The World Bank is partnering with countries to significantly reduce air, land and water pollution levels through pollution management planning and investment to improve people’s health. A new program on Pollution Management and Environmental Health, which will be formally launched in Washington D.C. on April 18 during the Global Citizen Earth Day event, will initially focus on air quality management in countries facing rapid urbanization and strong needs for pollution abatement measures, but also tackle water and land pollution. The program also aims to generate new knowledge on pollution and its health impacts in urban, rural and marine areas, and promote awareness of this issue among policymakers, the public and other stakeholders. Show Less -
ContextRapid urbanization, industrialization and motorization have intensified pollution, especially in developing countries. Vehicle exhaust, untreated wastewater, nitrogen fertilizer runoff, dirty f... Show More +uel burning, industrial emissions and toxic waste including e-waste cause debilitating and fatal illnesses, destroy ecosystems and create harmful living conditions.Pollution is not a uniquely urban challenge; in rural areas, indoor cook-stoves, undrinkable water and contaminated soil are toxic and stunt economic growth. Poor people, who can’t afford to protect themselves from the negative impacts of pollution, end up suffering the most.In 2012, an estimated 9 million people died from air, water and land pollution, according to the Global Alliance on Health and Pollution. According to the World Health Organization, 7 million people died from air pollution alone. Environmental factors, especially air pollution, cause 24 percent of global disease and 13 percent of preventable deaths every year.While the challenge of pollution is a global one, the impacts are overwhelmingly felt in developing countries. About 95 percent of adults and children impacted by pollution-related illnesses live in low and middle-income countries.It is critical to address pollution because of its unacceptable toll on health and human capital, as well as associated GDP losses. Pollution management offers no-regrets options to boost economic development and competitiveness (through for example, improved transport, job creation, better energy efficiency, sustainable urban and rural development), mitigate related climate change (for example black carbon contributes to both air pollution and global warming), and address the vital demands of millions of people for healthier and more productive lives.StrategyThe World Bank Group works with developing countries and development partners to reduce pollution, implement proper waste management, improve water and air quality and promote clean development for healthier lives and better economic opportunity.Between 2009 and 2014, World Bank commitments (IBRD/IDA) to pollution management and environmental health totaled well above US$5 billion. In 2014, the World Bank established a Pollution Management and Environmental Health (PMEH) program that builds upon experiences in urban and rural pollution reduction from around the world to promote more systematic and effective responses to deadly and costly pollution.The World Bank also partners with the Climate and Clean Air Coalition and the Global Alliance on Health and Pollution to achieve greater global action to clean up pollution.The Bank provides technical assistance, financing and knowledge products that cover:legacy pollution cleanup and land rehabilitation;management of different forms of waste including solid waste, industrial/e-waste, and wastewater;improving air quality through the reduction of indoor/outdoor air pollution, short lived climate pollutants and GHG emissions;improving water quality, both in freshwater and in oceans;promoting environmental sustainability in economic sectors;helping countries improve environmental governance, regulation and enforcement.ResultsAir pollutionIn Santiago, Chile, the Sustainable Transport and Air Quality program supported a long-term shift to more efficient and less polluting forms of urban transportation.In Bangladesh, the Bank is working to tackle pollution from the country’s two biggest polluters: brickfields and transport. To date, 11 stations have been installed in eight cities to monitor air pollutants and generate real time air quality data.Clean Air and Healthy Lungs, a report released in 2015, examines lessons learned from past projects to enhance the World Bank’s air quality management work in the future.More results:Curbing Air Pollution in UlaanbaatarCleaner Cookstoves for a Healthier IndonesiaCutting Short-Lived Climate PollutantsLand PollutionIn Africa, a $25 million program has removed over 3,000 tons of obsolete and dangerous pesticides from close to 900 contaminated sites in Ethiopia, Mali, Tanzania, Tunisia and South Africa.In Belarus, the Bank worked with the Ministry of Natural Resources and Environmental Protection to develop its capacity to treat and dispose of hazardous waste. The Bank supported a massive cleanup operation at the Slonim burial site, which excavated and disposed of up to 1750 tons of toxic obsolete pesticides.More results:Argentina Solid Waste ManagementCleaning up Uranium in ArgentinaKosovo Energy Sector Cleanup and Land ReclamationRidding Moldova of Toxic ChemicalsSolid Waste Management in IndonesiaWater pollutionIn China, the Bank supported the government to establish the integrated management of water resources and the environment in the Hai Basin. Between 2004 and 2011, the project reduced wastewater discharge, cleaned over 6 million m3 of polluted sediment from the Dagu Canal, and improved living conditions for millions of people. Also in China, the Bank helped improve water and wastewater services for residents in Ningbo by financing investments in a water intake tower and tunnel, water treatment plant, water transmission pipes, sewers and pumping stations, greatly reducing pollution loads discharged into Hangzhou Bay.More results:Kazakhstan Nura River Cleanup ProjectControlling pollution in Croatia’s Coastal WatersWastewater treatment and landfills ease pollution in China’s Yangtze River Show Less -
Even though female workers comprise 40% of the world’s labor force, the International Labor Organization estimates than nearly half of women’s productive potential is not being used.But a study by the... Show More + International Finance Corporation (the World Bank Group entity that works with the private sector) reveals that if companies hired more women, they would not only help to protect women’s rights, but also improve their businesses.The report analyzed different aspects of women’s employment and included suggestions on how to estimate the benefits and calculate the costs for a company that decides to open its doors to the female workforce.The report also presents six case studies of companies in different regions around the world that obtained concrete benefits from hiring women and establishing policies to promote gender equality in the areas of recruitment, management and wages, or developing flexible maternity, family and health policies. The companies were:Odebretch (Brazil): This construction company significantly increased the number of potential candidates to occupy jobs ranging from entry level positions to top management posts, enabling the company to access the best talent available.Anglo American (Chile): Despite preconceived notions that this firm’s jobs were “man’s work,” this mining company decided to hire female workers, which increased its productivity and innovation, strengthened team dynamics and streamlined the decision-making process.Continental (Thailand): Women make up 41 percent of the staff of this auto parts supplier. In a country where there are few engineers and few well trained local employees, this company managed to attract and keep the type of workers it needed.Finlays Horticulture (Kenya): In two years, the internal promotion of 69 women saved this agricultural company the US$ 200,000 it would have cost to hire and train new employees.Mriya Agro Holding (Ukraine): In rural Ukraine, women live up to 10 years’ longer than men. In addition, many men emigrate. By hiring women under good working conditions, this company keeps more employees and has a good relationship with the community – which in turn helps attract investors.Nalt Enterprise (Vietnam): In 2008, this clothing exporter established a daycare center for employees’ children. Since then, monthly staff turnover has decreased by a third. This means a savings of nearly US$500 for every employee it did not need to replace.Latin American barriersUnfortunately, these types of initiatives are uncommon in Latin America. In some countries in the region, barriers to women’s employment are not only cultural but often legal and administrative as well.World Bank Economist Elizaveta Perova says that “the lack of flexible, family-friendly policies, together with traditional gender roles that assign women household responsibilities, impede women’s access to paid employment.”These constraints carry considerable weight, for example, in many women’s decision not to pursue more lucrative careers in science, technology, engineering or mathematics. This is compounded by practical difficulties, such as the absence of affordable, quality childcare services for the children of working mothers.Nevertheless, the work of Latin American women was crucial for enabling the region to make significant progress in overcoming extreme poverty. Approximately 30% of the reduction in extreme poverty between 2000 and 2010 is attributed to the work of women, according to experts.To combat stereotypes, experts recommend creating programs to develop non-conventional skills for women to promote their interest and opportunities in engineering, mechanics and other traditionally “male” sectors. Show Less -
On World Water Day we invite you to discover the most important challenges that a region like Latin America faces, through cartoons drawn for the World Bank Group by artists from around the world.&nbs... Show More +p;1. For water services to work properly is essential to undertake regular maintenance just like you would with a computer or a car.The amount of water lost before reaching households – due, for example, to broken pipes - is estimated to be around 15% in developed countries, while in developing countries it can reach up to 50%.Learn more: Improvements in Water and Sewage Systems to Reach More than 200 Thousand Residents in Northern Lima 2. Due to global warming, glaciers, one of the most important sources of fresh water, are melting.In widely covered of glaciers, like the White Range in Peru or the Real Range in Bolivia, the total area has shrunk by about a third compared to the surface area during the Little Ice Age.Learn more: With Data and Technology, Ecuador is Seeking Solutions to Glacier Retreat 3. Lack of water causes more deaths than earthquakes and hurricanes combined.Since late 2013, the largest city in South America, Sao Paulo -a city of 11 million inhabitants - has suffered the most severe drought in 80 years.Learn more: A shower: an unattainable dream for 36 million Latin Americans 4. Sources of water contaminated with fecal matterIn Latin America, three quarters of the region’s wastewater is discharged into rivers and other water sources. This not only creates a severe public health problem, but also damages - sometimes irreparably - the environment.Learn more: Significant advances in the recovery of the Matanza-Riachuelo River Basin 5. World Water Day is also a tribute to womenIn communities like Rio Grande in Brazil, access to water allows women to devote more time to their farms and themselves, leading to an increased family income of up to 30%.Learn more: In northeastern Brazil, investments in water ease the burden on women Show Less -
Potential actionsAlthough the winds are favorable with respect to women’s labor market participation in Latin America, more actions should be taken to reduce the wage gap and favor women’s school... Show More +-work transition:Improvements in transport, increased access to childcare and flexible work schedules can contribute to increasing women’s available time. In Argentina, free public childcare services increased women’s labor market participation by 7% in 2011.Increase access to assets, land and credit. For example, by increasing access to formal credit markets (beyond microcredit) and to financial training. Support vulnerable families. Especially poor households headed by single women.Promote women’s empowerment through training programs and support to the labor-market transition and the creation of women’s employment networks.Additionally, the specialist believes it is crucial to work with the private sector to reduce the wage and employment gap given that this sector employs nearly 90% of workers around the world. Show Less -