GDP in Latin America and the Caribbean grew 3 percent in 2012. Growth is expected to remain robust, at 3.5 percent, as strong domestic demand compensates for weak global economic conditions.
Steady growth and sound economic policies improved the lives of millions in the region over the past decade, with more than 70 million people lifted out of poverty and 50 million joining the ranks of the middle class between 2003 and 2011. For the first time ever, the number of people belonging to the middle class surpassed the number of poor, a sign that Latin America and the Caribbean is progressing toward becoming a middle-class region.
World Bank assistance
The Bank approved $5.2 billion for 41 projects this fiscal year. Support included $435 million from IDA and $4.8 billion in IBRD commitments. The leading sectors were Public Administration, Law, and Justice ($2.1 billion); Health and Other Social Services ($891 million); and Transportation ($694 million). The Bank’s focus is on improving opportunities for the bottom 40 percent of the population by ensuring them better access to basic services, including education and health, without neglecting environmental sustainability in the region.
In line with the World Bank’s overall strategy to reduce poverty and promote shared prosperity, its work in the region will continue to address the five core areas that follow.
Promoting shared prosperity
Despite the impressive gains of the past decade, the region remains unequal, with some 82 million people living on less than $2.50 per day. Creating opportunities for the vulnerable is at the top of the Bank’s regional agenda. Another priority is to carve out a greater economic role for women. More than 70 million women joined the labor market in the past decade, but income disparities and balancing work and family life still remain large issues.
Boosting growth and productivity
The region’s extraordinary recent growth and its ability to weather the global recession contrast with outcomes in other regions, including developed countries. However, to move forward, productivity will need to improve. The educational system does not meet global standards, infrastructure is outdated, and logistics costs are high. Throughout Central America, expanding trade integration and logistics is a priority. It is essential, for example, to unclog the bottlenecks associated with transport, customs clearance, and rural roads, which make it 10 times more expensive to ship tomatoes from Costa Rica to Nicaragua than to California.
Building more efficient states
Access to quality public services remains a challenge. Citizens have high expectations, yet in many countries, the government lacks the capacity to meet their demands. About 7 percent of the population does not have access to safe water, and 20 percent of Latin Americans still lack access to sanitation. Citizen security is another development challenge for many countries, especially small ones. Law enforcement, security, and health care costs amount to almost 8 percent of Central America’s GDP, 5 percent of Brazil’s, and 3.7 percent of Jamaica’s. Governments are eager to develop an integrated response to growing crime and violence. The Bank has been supporting these efforts through financing as well as with high-level knowledge exchanges. Looking for novel approaches to gender violence, a Bank-supported regionwide hackathon produced several mobile applications to fight a scourge that affects about half of the female population in parts of Central America.
Supporting inclusive and sustainable growth
The region has served as a global laboratory for some of the most innovative practices for sustaining natural wealth. Accounting for only 6 percent of global greenhouse gas emissions from the power sector, the region has the lowest carbon energy matrix of the developing world. It has also adopted payment schemes for preserving the environment. But the economic bonanza of recent years has led to exploding urbanization: over 80 percent of the region’s population lives in cities. Inclusive and sustainable growth is paramount for the region’s development and for preserving natural resources for future generations.
Preparing for natural hazards
The region is home to 9 of the top 20 countries exposed to natural disasters, and the effects of such hazards cost governments about $2 billion annually. Countries have become more disaster savvy, but a greater shift toward prevention is needed. The Bank provides tools and mechanisms to boost resilience, including cutting-edge instruments, such as catastrophic risk insurance. For example, since the 2010 earthquake in Haiti, the Bank has provided housing grants to more than 60,000 people, which have allowed them to move from camps to safer housing. It has upgraded neighborhoods with wider roads, better lighting, and fortified ravines, and has repaired or rebuilt homes. In other parts of the region, such as Colombia, Honduras, and Mexico, the Bank is supporting comprehensive disaster risk management strategies.
Working with member countries
The World Bank supports the region’s broad agenda by tailoring its diverse financial, knowledge, and convening services to the region’s diverse needs. The Bank helped to address pressing needs through development project financing; innovative mechanisms, such as the Climate Investment Funds; and in- depth development research, such as the 2012 flagship report Economic Mobility and the Rise of the Latin American Middle Class.
As the conditions in member countries evolve, the Bank will continue to partner with them to focus efforts on their development priorities. New Country Partnership Strategies for Guatemala and Nicaragua, for example, support government efforts to enhance competitiveness and sustainable growth and to move toward a more equitable society. An Interim Strategy for Haiti focuses on long-term development, capacity building, and the provision of social services to all citizens.
|The regional report for Latin America and the Caribbean||PDF (201KB)|