The Lima Chamber of Commerce said that Peru’s decade-long decline in poverty could come to a halt if the country’s growth begins to slow down to around 3.5% per year, daily RPP Noticias reported.
The business group’s chief economist, Cesar Peñaranda, said that poverty could begin to rise if growth decelerates to below 3.5% because the government’s social programs would become unsustainable.
“We are getting close to the end of the cliff in terms of the fight against poverty and the creation of productive employment,” he said.
The Lima Chamber of Commerce is forecasting that Peru’s economy will grow by only 3.8% to 4.3% this year, due to internal factors that have hurt private investment. Many other economists believe that Peru’s slowdown is principally related to the end of a commodities boom that spurred investments and the export of minerals such as copper and gold.
Economic growth decelerated to 1.8% in May, and 2% in April.
That strong economic growth, averaging over 6% per year during the past decade, led to a steady decline in poverty from over 50% at the end of the Fujimori administration to less than 20% last year.
Unlike other countries where growth of 3% to 4% would be applauded, Peñaranda said that rate of growth would not create enough new jobs for Peru’s growing labor market.
“If the economy doesn’t grow above 4.6%, we won’t be able to create sufficient employment for those entering the labor market,” he said. “The manufacturing sector, for example, is already creating unemployment.”