A leading business organization in Peru says the country needs to maintain annual economic growth of at least 5.5 percent in order to lower poverty, according to state news agency Andina.
Cesar Peñaranda, the chief economist at the Lima Chamber of Commerce, said that poverty could rise if yearly growth is less than 4 percent.
“Peru needs to grow no less than 4 percent for poverty to not increase and to create jobs for the 365,000 new workers that come into the job market every year,” he said.
Peru’s poverty rate has fallen from over 50 percent 10 years ago to around 25 percent last year, according to government statistics. The decline has been due to robust economic growth that has averaged about 6 percent per year over the last decade. Despite the decline, poverty remains stubbornly high in many remote Andean regions.
However the strong economic run slowed last year, with growth of just 5 percent compared to 6.3 percent in 2012 and 6.9 percent in 2011. In 2010, the economy expanded 8.8 percent.
The decline was due to lower metal prices that hurt exports, and to weaker domestic demand.
Many economists expect a rebound this year, due in large part to higher mineral output. The Finance Ministry said Wednesday that it forecasts growth of 5.7 percent this year, and average annual growth of 6.4 percent from 2015 to 2017.
Public sector investments are expected to see a boost this year, as the government finances new infrastructure projects. However, Peñaranda said that private sector investments, which slowed down considerably last year, need to recover for the economy to continue its strong growth.
“Public investment is welcome, but it is necessary to return to private investments because they are the engine that drives the economy and represent 22 percent of the GDP,” he said. “If not, Peru won’t reach the rates that it is hoping for.”