Overview

The Latin American & Caribbean region (LAC) is at a turning point. The windfall from the global commodities boom has faded while LAC governments face increased social expectations from an emerging middle class that is more connected, more involved, and demanding more.

Gross Domestic Product in the region is expected to contract 1.1 percent in 2016, following about a half percentage point decline in 2015. That marks the first back-to-back years of recession in over three decades. The region’s economy is forecast to grow by 1.8 percent in 2017 and continue expanding in 2018, but that will largely depend on the strength of external markets and the capacity to address macroeconomic challenges.

Domestic markets and domestic demand are no longer enough to fuel growth now that the commodity windfall is gone. External demand and shifting resources to the export economy are needed. Many LAC countries are already doing this and looking to international economic ties as a potential source of stable growth. Crucial to this transformation will be complementing regional integration with global integration efforts.

Restoring economic growth and investing in people will be key to preserving, and further boosting, the deep economic and social transformations that LAC has undergone. Over the last decade, millions of people have been lifted out of poverty and have swelled the ranks of the middle class. Strong economic growth – driven by the commodity boom, domestic reforms and a favorable global economic environment - was responsible for this progress. Complementary social programs, made possible by growing fiscal space, helped support the poor and disadvantaged.

Now, satisfying increasing demands from the middle class is harder as governments adjust to the post-boom reality. The transformation happened so fast that governments are having difficulty keeping up and responding to those demands. Transparency and accountability are fundamental to maintaining government credibility and heading off impatience from the population and markets.

Investing in people, particularly the poor, will be key to continuing recent social gains and reducing LAC’s persistent inequality. In particular, investment in education quality will play an important role in allowing the poor to contribute to and benefit from future economic growth. Additional emphasis should be placed on building skills and reducing obstacles to economic activity, such as poor infrastructure and inflexible labor or financial regulations.

Last Updated: Oct 04, 2016

Latin America now faces a host of challenges, which threaten the social transformation and profound gains made over the past decade. The prolonged economic downturn requires 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 rekindle growth and solidify hard-won social gains. Our focus is on laying the groundwork for economic recovery, improving infrastructure, investing in human capital and protecting the poor.

Our work in the region includes the following core areas:

Shared prosperity: Latin America underwent a profound transformation over the past 15 years. Between 2000 and 2014 millions of people were lifted out of poverty. The middle class, who lives on US$10-US$50 per day, makes now up 35 percent of the region’s total population. Inequality, however, still abounds and millions 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.

Spurring economic growth: To set the stage for economic recovery, the region needs to increase productivity, strengthen the business environment, and expose companies to greater domestic and external competition.

Building sustainable infrastructure: Building better and more sustainable infrastructure to support higher growth in the region will require mobilizing investment from both the public and the private sectors. The Bank has played a catalytic role in this effort, providing lending and technical assistance to develop high-quality infrastructure with a lower carbon footprint.

Investing in the poor and vulnerable: Protecting the poor and vulnerable from the economic slowdown, and building their human capital so they can share in the benefits of growth are top priorities in the region.

Building resilience and responding to shocks : Helping countries to build resilience against unexpected shocks --such as natural disasters, public health emergencies, and crime and violence—represents a cross-cutting theme that spans the bank’s operational work.

Transparency and accountability: 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 World Bank is working to foster more effective and transparent governance to improve services and strengthen institutions.

Last Updated: Oct 04, 2016

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.

In February 2016 the World Bank offered $150 million to support the region’s response to the Zika virus.

Research highlights include Out of School and Out of Work: Risk and Opportunities for Latin America’s Ninis, Indigenous Latin America in the Twenty-First Century: The First Decade and a recent study on teacher quality.

Conferences such as “Governance for Growth with Equity,” held in Uruguay in April, demonstrate the Bank’s capacity to convene leaders around rising regional challenges.

Some program highlights in specific countries include:

Argentina: Three projects totaling US$ 845 million were recently approved: expansion of the Universal Child Allowance (AUH) program extending benefits to 1.5 million more children (US$ 600 million), better drainage systems for flood risk management in the city of Buenos Aires (US$ 200 million), and Productive Innovation (US$ 45 million).

Brazil: The Parana Multi-Sectoral Development Project (SWAP) improves emergency health networks for mothers and children. The maternal mortality rate (MMR) in Parana State dropped from 63.8 percent in 2010 to 37.5 percent in 2015. The number of beds in neonatal intensive care grew from 268 to 1,714. The percentage of pregnant women identified as high risk of complications in primary care units is 99 percent, well above the 50 percent goal.

Bolivia: The Bank is helping to develop a comprehensive system to better manage disaster-related risks. In addition, the Rural Alliances Project (PAR) supported 770 producer organizations in 110 municipalities with a total of 29,000 beneficiary families increasing their income by 33 per cent in rural areas. The second version of the project is underway and will benefit 35,000 families in 120 municipalities.

Ecuador: Hundreds were killed and thousands wounded following a major earthquake in April. The Bank immediately made funds available from a recently approved $150 million Risk Mitigation and Emergency Recovery Project to pay for medicine, mobile hospitals and other basic services.

Haiti: The Bank works with its partners in the Education for All program to increase access to schools and quality education for 73,000 disadvantaged children and to provide daily meals for 132,000.

Honduras: The Rural Competitiveness Project (COMRURAL) helped more than 7,000 small farmers in rural areas improve their income. Farmers added value to their products through investments in productive technology and market knowledge.

Mexico: A US$400 million loan will support the efforts of the Mexican government to expand credit for productive purposes in rural areas. This project will fund around 75,000 loans to MSMEs in rural areas as well as small agricultural producers. A little over half are expected to go to women's projects. The Bank is also helping expand access to a broader range of social services for beneficiaries of the Prospera conditional cash transfer program.

Nicaragua: The Second Land Administration Project (PRODEP II) covers six of the 15 Departments in the country, and has helped develop better property rights regulations benefitting more than 430,000 people, over half of which are women. Cadastral information for about 85,000 parcels has been updated and more than 67,000 families have received legal documents for their properties, with over 43,000 being new land titles.

Paraguay: The Sustainable Rural Development Project helps improve the quality of life of small-scale farmers and indigenous communities. Community organizations and self-governance are supported to enhance natural resource management and improve socioeconomic conditions.

Peru: A project is working to extend the benefits of rehabilitating water and sewage networks to more than 239,000 low-income residents in Northern Lima. The bank is also helping to promote productivity by raising the quality of public education and helping to improve the business environment by reducing entrance, operation, and market exit costs for companies.

St. Lucia: In St. Lucia the Climate Adaption Finance Facility promotes increased climate resilience. More than 35,000 people (20 per cent of the population) have already benefitted from the rehabilitation of two bridges, 11 schools and four health facilities damaged by Hurricane Tomas.

Last Updated: Oct 04, 2016





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