Overview

  • The Latin America and Caribbean region (LAC) seems to have turned the corner: after six years of slowdown, including two of recession, it is growing again. However, the years of economic stagnation have halted social progress, and the region needs to spur the economic recovery and find new engines of growth to reduce poverty and boost prosperity further.

    The hardest-hit developing region during the global deceleration, LAC is expected to expand by 1.2% in 2017, followed by 2.1% in 2018. Argentina and Brazil are coming out of recession, Mexico will keep growing, and Central America and the Caribbean will grow faster. But the six years of slowdown had adverse effects on jobs and household incomes: inequality is no longer dropping, the growth of the middle class has slowed, and nearly 39% of Latin Americans remain vulnerable to falling back into poverty.

    The region’s  to-do list includes boosting investment, savings and exports and fostering private sector development. Countries need to address external and fiscal imbalances, strengthen regional economic integration to become more competitive globally, and avoid unduly sacrificing investment in the adjustment process. Current gaps in logistics and infrastructure are important obstacles for intra-regional trade; the average logistics costs are 3 to 4 times higher than OECD countries. 

    LAC can’t lose sight of the need to build resilience to shocks –economic, natural, or social, including crime and violence – and encourage greater transparency and accountability. Shifting from a procyclical to countercyclical policy framework is necessary to ensure sustainable and equitable long-term growth, and many countries in LAC already made the shift in the last decade.

    However, growth alone won’t be enough to continue recent social gains and the reduction of LAC’s persistent inequality. To do so, LAC needs to invest in people, particularly the poor. LAC continues to underperform in education: around one out of every three youth doesn’t finish high school.  Investment in education quality will play an important role in allowing the poor to contribute to and benefit from future economic growth.

    Last Updated: Apr 17, 2017

  • Latin America faces a host of challenges that require a steady commitment to protect the most vulnerable and safeguard the gains made by those who escaped poverty to enter the middle class. The World Bank is striving to help countries preserve those hard won gains, and move forward with a competitiveness agenda that will allow growth to be sustained. Our focus is on strengthening the economic recovery, improving infrastructure, investing in human capital and protecting the poor.

    The World  Bank  offers a package of financial services that go beyond traditional loans (risk management, risk insurance, swaps, climate insurance, climate adaptation financing, commodity swaps). We also serve as a powerhouse of global ideas and experience and a meeting ground for key players to facilitate development solutions tailored to each country’s needs.

    Shared prosperity: Latin America underwent a profound transformation over the past 15 years. Between 2000 and 2014 extreme poverty (US$2.50 a day) was cut by more than half from 25.5 to 10.8 percent, and overall poverty (less than US$4 a day) decreased dramatically from 42.8 to 23.4 percent. However, inequality still abounds and many remain at risk. Despite the gains, 82 million people still live in extreme poverty.  The middle class, who lives on US$10-US$50 per day, makes up 35 percent of the region’s total population. However, nearly 39% of Latin Americans live on US$4-US$10 per day and remain vulnerable to falling back into poverty. Helping countries get back on track for growth and modernizing their social protection systems is at the top of the Bank’s regional agenda.

    Increased productivity: The region’s productivity suffers from high logistical costs, aging and inadequate infrastructure, and the need for more investment in human capital. Logistics in Latin America and the Caribbean cost 2 to 4 times more than in OECD countries and the Asian Tigers. The Bank is working closely with countries to increase efficiency, spur innovation, develop urban and rural infrastructure, and develop a better skilled and more flexible labor force.

    Investing in Human Capital: Improving the quality of education is fundamental to developing the skills demanded by the global marketplace. Latin America has virtually universal access to education, but quality remains an issue.  A recent World Bank study shows that low average teacher quality and management make Latin American students lose the equivalent of one full day of class every week. One in five Latin Americans aged 15 to 24 don't work or study, posing major development challenges. The Bank supports a host of initiatives designed to improve education services and nurture the human capital needed for future development.

    Better governance: The larger middle class expects more from its governments. At the same time, access to quality public services remains a challenge and there is growing dissatisfaction with the quality and level of services provided by the state – including education and security, among others.  Through finance and high-level knowledge exchanges, the Bank is working to foster more effective and transparent governance to improve services and support an integrated response to social challenges like growing crime and violence. 

    Environmental protection and green growth: Latin America and the Caribbean has contributed little to high global emissions, but is now is leading on green transport, emission targets, and payments for environmental services. The region is a global showcase for some of the most innovative, environmentally friendly practices. However, The economic bonanza seen in recent years led to new pressures: over 80 percent of the region’s population now live in cities. In addition, climate change poses significant threats. A 2 degree rise in temperature would reduce Brazil’s soybean crop by 70% and the Caribbean’s fish-catch volume by 50%. There is a big responsibility with the world’s largest freshwater reserves and carbon sink in the Amazon rain forest. The Bank’s green growth agenda recognizes the importance of sustainability in the region’s development, and for preserving natural resources for future generations.

    Last Updated: Apr 17, 2017

  • The World Bank approved $8.2 billion and 31 operations for the region this fiscal year, including $8.0 billion in IBRD loans and $183 million in IDA commitments. The focus was on supporting economic recovery, building sustainable infrastructure, investing in the poor and vulnerable, building resilience and the ability to respond to shocks. 

    The World Bank tailors its extensive financial, knowledge and convening services to the region’s diverse needs. Countries increasingly turn to the World Bank for more than direct lending, taking advantage of services including risk insurance, commodity swaps, climate adaptation finance, technical assistance, convening assistance and development research. 

    The Caribbean Catastrophe Risk Insurance Facility helps more than 20 Caribbean and Central American countries pool risk, access low cost disaster insurance, and better manage catastrophic risk.

    In Lima, Peru, and Quito, Ecuador, the Bank is working to develop metro systems that will reduce carbon emissions and unlock congestion. In the Caribbean, it is modernizing grid systems and helping businesses to retrofit their buildings so they can save energy and draw on renewable sources of power.

    Conferences such as “the Caribbean Dilemma,” held in Miami in March, demonstrate the Bank’s capacity to convene leaders around rising regional challenges.

    Some program highlights in specific countries include:

    Argentina: The northern provinces of Catamarca, Chaco, Corrientes, Formosa, Jujuy, Misiones, Salta, Tucumán and Santiago del Estero are home to 7.5 million people. Here the World Bank has provided US$ 800 million for water and road infrastructure projects that form part of the National Government’s Norte Grande Development Program.

    Brazil: Millions of people facing poverty in the northeastern state of Ceará are benefitting from initiatives to increase professional training, improve family assistance programs and enhance water quality. Ceará Strengthening Service Delivery Program for Results (PforR) links disbursements to the accomplishment of pre-established development targets. 

    Caribbean: Given the high vulnerability of the region, disaster risk management and adaptation to climate change represent a growing portion of the World Bank's portfolio in the Caribbean. In St Lucia, the Climate Adaption Finance Facility promotes increased climate resilience. More than 35,000 people (20% of the population) have already benefitted from the rehabilitation of two bridges, 11 schools and four health facilities damaged by Hurricane Tomas.

    Ecuador: The project Creciendo con nuestros guaguas (Growing with our babies) is working to eliminate chronic malnutrition in children under five. The project works with parents and the community to improve children’s diets.

    Honduras: More than 7,000 small farmers in rural areas have improved their income by participating in the Rural Competitiveness Project (COMRURAL). Farmers have added value to their products through investments in productive technology and market knowledge.

    Last Updated: Apr 17, 2017

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Region Contacts

Washington, DC
Silvestre Ríos Centeno
1818 H Street NW, Washington, DC 20433
+1 202 458-9476
scenteno@worldbank.org
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