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1、LATIN AMERICA AND THE CARIBBEANECONOMIC REVIEWAPRIL 2025 2025 International Bank for Reconstruction and Development/The World Bank1818 H Street NW,Washington,DC 20433Telephone:202-473-1000;Internet:www.worldbank.orgSome rights reserved1 2 3 4 28 27 26 25This work is a product of the staff of The Wor

2、ld Bank with external contributions.The findings,interpretations,and conclusions expressed in this work do not necessarily reflect the views of The World Bank,its Board of Executive Directors,or the governments they represent.The World Bank does not guarantee the accuracy,completeness,or currency of

3、 the data included in this work and does not assume responsibility for any errors,omissions,or discrepancies in the information,or liability with respect to the use of or failure to use the information,methods,processes,or conclusions set forth.The boundaries,colors,denominations,links/footnotes and

4、 other information shown in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.The citation of works authored by others does not mean the World Bank endorses the views expressed by those a

5、uthors or the content of their works.Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank,all of which are specifically reserved.Rights and PermissionsThis work is available under the Creative Commons Attri

6、bution 3.0 IGO license(CC BY 3.0 IGO)http:/creativecommons.org/licenses/by/3.0/igo.Under the Creative Commons Attribution license,you are free to copy,distribute,transmit,and adapt this work,including for commercial purposes,under the following conditions:AttributionPlease cite the work as follows:M

7、aloney,William,Marcela Melendez,and Raul Morales.2025.Organized Crime and Violence in Latin America and the Caribbean.Latin America and the Caribbean Economic Review(April).World Bank,Washington,DC.doi:10.1596/978-1-4648-2235-3.License:Creative Commons Attribution CC BY 3.0 IGOTranslationsIf you cre

8、ate a translation of this work,please add the following disclaimer along with the attribution:This translation was not created by The World Bank and should not be considered an official World Bank translation.The World Bank shall not be liable for any content or error in this translation.Adaptations

9、If you create an adaptation of this work,please add the following disclaimer along with the attribution:This is an adaptation of an original work by The World Bank.Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endors

10、ed by The World Bank.Third-party contentThe World Bank does not necessarily own each component of the content contained within the work.The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights o

11、f those third parties.The risk of claims resulting from such infringement rests solely with you.If you wish to re-use a component of the work,it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner.Examples of components c

12、an include,but are not limited to,tables,figures,or images.All queries on rights and licenses should be addressed to World Bank Publications,The World Bank,1818 H Street NW,Washington,DC 20433,USA;e-mail:pubrightsworldbank.org.ISBN(electronic):978-1-4648-2235-3DOI:10.1596/978-1-4648-2235-3Cover desi

13、gn:Alejandro Espinosa/Edition:Nancy MorrisonAcknowledgementsThis report is a product of the Chief Economist Office for Latin America and the Caribbean at the World Bank.The preparation of the report was led by William Maloney(Chief Economist),Raul Morales Lema(Economist),and Marcela Melndez Arjona(D

14、eputy Chief Economist).Excellent research and editorial assistance were dispensed by Pilar Ruiz Orrico(Research Analyst),Gaston Marinelli(Research Analyst),Jos Andre Camarena Fonseca(Research Analyst),Laura Daniela Tenjo Galvis(Research Analyst),Laura Victoria Gonzalez Solano(Research Analyst),Nicol

15、as Pea Tenjo(Consultant)and Jacqueline Larrabure(Senior Program Assistant).Chapter 2 used a first draft of a policy document written by Marcela Melndez Arjona,Juan Fernando Vargas,and Ernesto Schargrodsky as an input.Substantive inputs were offered by the regional teams:Finance,Competitiveness and I

16、nnovation:Federico Alfonso Diaz Kalan(Financial Sector Specialist,ELCFN)and Guillermo Fernandez Zubia(Consultant,ELCFN).Poverty and Equity:Carlos Rodriguez Castelan(Practice Manager,ELCPV),Hernan Winkler(Senior Economist,ELCPV),Diana Marcela Sanchez Castro(Research Analyst,ELCPV),and Karen Yiseth Ba

17、rreto Herrera(Consultant,ELCPV).Country-specific macroeconomic estimates and write-ups were produced by country economists in the Economic Policy Global Practice,under the leadership of Shireen Mahdi(Practice Manager,ELCMU)and the coordination of Elena Fernndez Ortiz and Adriane Landwehr.Contributor

18、s included Daniel Barco,Rafael Barroso,Paola Brens,Luigi Butron,Natalia Campora,Bledi Celiku,Paulo Chavez,Fabiano Colbano,Antonio Cusato,Barbara Cunha,Anton Dobronogov,Aygul Evdokimova,Cornelius Fleischhaker,Julian Folgar,Sebastian Franco,Fernando Giuliano,Christian Gonzalez,Bernard Haven,Fernando I

19、m,Evans Jadotte,Melise Jaud,Santiago Justel,Andres Lajer,Woori Lee,Karen Muramatsu,Rafael Ornelas,Fausto Patio,Raphael Pinto Fernandes,Maryan Porras,Daniel Reyes,Natasha Rovo,Gabriela Schmidt,Heron Teixeira,Vasileios Tsiropoulos,Hulya Ulku,Constanza Vergara,Erik von Uexkull,Pui Shen Yoong,and Gabrie

20、l Zaourak(all ELCMU).Communications and Dissemination support was provided by Ana Elisa Luna Barros(Manager,ECRLC),Ruth Idalina Gonzalez Llamas(Senior External Affairs Officer,ECRLC),Analia Martinez(Online Communications Officer,ECRLC),Yuri Szabo Yamashita(External Affairs Officer,ECRLC),Belkis Delc

21、id Diaz(Program Assistant,ECRLC),Carlos Alberto Cortes Galavis(Consultant,ECRLC),Francisco Seminario(Consultant,ECRLC),and Leandro Juan Hernandez(Consultant,ECRLC).Nancy Morrison(Consultant,LCRCE)provided editorial support,Leonardo Padovani(Consultant,LCRCE)translated the document,and Alejandro Espi

22、nosa(Sonideas)contributed on design.The cutoff date for this report was April 10,2025.O r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a niiiContentsOverview 1Growth Outlook for the Region 7Chapter 1The State of theLACRegion 9Economic Activity:Growt

23、h Continues to Lag 10External EnvironmentExternal Headwinds Remain Challenging 12Heightening Uncertainty over Trade 13Inflation is Slowly Receding,while Monetary Policy Has Loosened 17Fiscal Sector:Fiscal Deficits and Debt Remain High 20Caribbean Focus 23Financial Sector:Non-Performing Loans Moderat

24、e,While Credit Growth Diverges across Subregions 25Labor Markets and Social Conditions:Recent Trends and Future Prospects 27Chapter 2Organized Crime and Violence in LatinAmerica and the Caribbean 44LAC Must Prioritize the Fight Against Organized Crime 45Weak Institutions in Critical Areas Fuel the P

25、roblem Instead of Mitigating It 57State Action to Fight Organized Crime Requires a Better Understanding of How It Operates 69Organized Crime Is a First-Order Problem for LAC Because It is a Growing Barrier to Development 74O r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a

26、n d t H e Ca r i B B e a nivC O n t en tsFiguresFigure 1.1.Growth Continues to Lag Relative to Other Regions 10Figure 1.2.Consumption Continued to Propel Growth in Most LAC-6 Countries 11Figure 1.3.As Budget Deficits Remain,Increased Private Savings Has Led to Improvements in the Current Account 11F

27、igure 1.4.Consumer Confidence Continues to Rise,While Business Confidence Remains Stable 12Figure 1.5.External Uncertainty Will Remain in 2025 13Figure 1.6.Trade Policy Uncertainty Has Increased over the Past Decade 14Figure 1.7.LAC Has Been Integrating into the World 14Figure 1.8.Workers in Export

28、Industries Are Exposed to Changes in International Trade 15Figure 1.9.LAC Export Patterns Vary by Trade Partner 15Figure 1.10.Exporters Productivity in LAC Lags Behind That of the United States 16Figure 1.11.Inflation is Moderating,but More Slowly than Anticipated 17Figure 1.13.Monetary Policy Has S

29、lowly Loosened in the LAC-5,Except for Brazil 18Figure 1.12.Inflation Expectations Remain Anchored 18Figure 1.14.Major Currencies in the Region Have Depreciated Due to a Strong Dollar and Monetary Loosening 19Figure 1.15.Fiscal Deficits Persist Significantly Due to Rising Interest Payments 20Figure

30、1.16.Debt Service Weighs Heavily on Public Spending,Limiting Investment 20Figure 1.17.Public Debt Stabilized at High Levels 21Figure 1.18.Borrowing Costs Remain High 21Figure 1.19.More Indebted Countries Are More Sensitive to Interest Rates Hikes 22Figure 1.20.While Tourism-Dependent Countries Have

31、Recovered from Pre-Pandemic Levels,Commodity Exporters Have Not 23Figure 1.21.The Inflation Surge is Receding 24Figure 1.22.The Path of Public Debt Varies across the Caribbean and Central America Regions 25Figure 1.23.Despite Moderation in Non-Performing Loans,Vigilance is Still Necessary 26Figure 1

32、.24.Credit Growth Diverges among LAC Economies 26Figure 1.25.The Pace of Poverty Reduction Tracks Economic Growth across Emerging Regions 27Figure 1.26.LACs Poverty Reduction Slowed in the Last Decade and Was Outpaced by Regions with Stronger Growth 28Figure 1.27.LACs Poverty Reduction Trends Improv

33、ed in Brazil and Mexico,While Most Other Countries Faced Setbacks in 201823 28BoxesBox 1.1.Can Artificial Intelligence Be the Long-Awaited Remedy for Income Inequality in Latin America?38Box 1.2.Are Latin American Workers Ready for an Energy Transition?41Box 2.1.An Overview of Environmental Crimes i

34、n the Brazilian Amazon 51Box 2.2.The Rosario Prison Intervention in 2024 60Box 2.3.Mexico Citys High-Impact Crime Reduction Strategy 63Box 2.4.Rio de Janeiros Community-Oriented Policing Strategy 64Box 2.5.Justice Indicators:Definition and Purpose 67Box 2.6.Mobile Service Units May Be a Way to Bring

35、 the State Where it is Absent 68Box 2.7.Follow the Money:Dismantling Criminal Organizations Requires Disrupting the Financial Flows and Networks that Sustain These Groups 70Box 2.8.Understanding and Countering Organized Crime in Medelln 71Box 2.9.Specialized Research on Gangs in El Salvador 73Box 2.

36、10.Cases in Which Security and Prevention Policies Strengthen One Another 76O r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a nvC O n t en tsFigure 1.28.Public Transfers Have Mostly Returned to Pre-Pandemic Levels Amidst Limited Fiscal Space 29Figu

37、re 1.29.Employment Rates Were Mostly Back to Pre-Pandemic Levels by Mid-2024,with a Few Exceptions 29Figure 1.30.The Three Largest Economies in the RegionBrazil,Mexico,and ArgentinaWere Already Operating at Historically Low Unemployment Rates by Mid-2024 30Figure 1.31.Labor Income Was Stagnant in Mo

38、st Countries,with Gains in Lower Income Deciles in Brazil,Colombia,and Mexico 30Figure 1.32.Employment in Most LAC Countries Is Highly Concentrated in Small Firms with 14 Workers 31Figure 1.33.LACs Low Growth,Lack of Skills and Tough Labor Rules Perpetuate the Large Informal Sector 31Figure 1.34.Mos

39、t of the Informal Labor Force Has Basic or Less-than-Basic Education 32Figure 1.35.Labor Productivity Growth Leads to Real Labor Earnings Growth across the Region 32Figure 1.36.The Potential for Labor Productivity Improvement Is Significant 33Figure 1.37.Poverty Reduction Gains in LAC over the Past

40、Two Decades Have Been Impressive 33Figure 1.38.Advances in Reducing Income Inequality Have Been Moderate 34Figure 1.39.LACs Net Migration Flows Continue to Increase 34Figure 1.40.Other LAC Countries Have Emerged as the Top Destination for Venezuelan Migrants 35Figure 1.41.Most Emigrates from LAC Cou

41、ntries Live in the United States 35Figure 1.42.As Deportations Increase,Net Migration into the United States Continues to Be Positive for Most LAC Countries 36Figure 1.43.Countries in Central America and the Caribbean Are Highly Dependent on Remittances 37Figure 1.44.The Recent Spike in Deportations

42、 Has Helped Lower the Growth of Remittances 37Figure B1.1.1.Employment Exposure to GenAI is Higher in the More Developed LAC Countries 38Figure B1.1.2.LAC Countries Currently Use Fewer Digital Technologies in Jobs with GenAI Augmentation Potential Compared to Advanced Counterparts 39Figure B1.1.3.Ho

43、useholds in Higher Income Quintiles Have a Higher Share of Workers Exposed to GenAI Augmentation and Who Use a Computer at Work 40Figure B1.2.1.Green Occupations and Green Sectors Are at Relatively Low Levels in LAC 41Figure B1.2.2.The Poorest Quintiles in LAC are Most Vulnerable to Job Loss during

44、a Green Transition 42Figure 2.1.Organized Crime is Increasingly Appearing in Google Searches in LAC 45Figure 2.2.Twelve LAC Countries Are Among the Top 50(of 193)for Organized Crime 46Figure 2.3.LAC Presence Is Significant in Many Criminal Markets 47Figure 2.4.LAC Has the Highest Average Homicide Ra

45、te Worldwide 53Figure 2.5.LAC Countries Suffer More Lethal Violence than Others with Similar Development and Inequality Levels 54Figure 2.6.The Homicide Rates Varies Greatly across LAC Countries 55Figure 2.7.Victimization is More Evenly Distributed than Homicides in LAC 55Figure 2.8.LAC Is the World

46、 Region with the Highest Excess Lethal Criminal Violence 56Figure 2.9.LAC Countries Have Relatively High Incarceration Rates 57Figure 2.10.10 LAC Prisons Are Overcrowded,and Many Prisoners Are Unsentenced 58Figure B2.2.1 Homicides Declined Sharply after the Rosario Prison Intervention 60Figure 2.11.

47、The Size of Police Forces Varies across Countries 61Figure 2.12.Most Latin American Countries Rank Poorly on the Effectiveness of their Criminal Justice Systems 65O r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a nviC O n t en tsOverviewThe outlook

48、 for the Latin America and the Caribbean(LAC)region has become more uncertain as modest advances on the internal front are being compounded by a more challenging external scenario.Progress continues in the fight against inflation,although the last mile is proving long and the pace of interest rate d

49、eclines has slowed.Consumer and business confidence continue to rise or remain stable,tourism in the Caribbean has fully recovered,and job markets in the largest economies continue to tighten,facilitating modest poverty reduction.The external environment,however,has changed substantially in the six

50、months since the October 2024 Latin America and Caribbean Economic Review(LACER),with both short-term and long-term consequences.Inflation in the advanced countries,instead of being nearly vanquished as previously expected,looks to persist,delaying further interest rate cuts and constraining regiona

51、l authorities room to loosen monetary policy further.The apparent shift toward higher tariffs by the United States casts uncertainty on the nearshoring project,the practice of bringing offshore operations to nearby or friendly countries,and global market access more generally.LACs other principal ma

52、rketChinacontinues to show sluggish growth.Recent cuts to overseas development assistance by worlds advanced economies will affect some countries acutely.Though over the last decade,growing migratory flows have shifted away from the United States and have increased from one LAC country to another,in

53、creased return migration from the United States will strain local labor markets and resources for reintegration.Finally,the growing expansion of transnational organized crime has elevated crime and violence to be a dominant source of civic discontent and poses acute challenges to governance and deve

54、lopment within LAC.These challenges will complicate efforts to reignite growth,redress fiscal imbalances and reduce debt,and regain the advances in reducing poverty of the previous decade.LACs growth rates continue to be one of the slowest of any world region.Investment,both public and private,remai

55、ns subdued and even before the increased uncertainty introduced by the rising US tariffs,there was evidence that the region was potentially missing the boat on“nearshoring”.The modest results in both growth and trade underline the need for progress on the long-standing reform agenda to prepare regio

56、nal economies for new challenges and potential opportunities.Chapter 1 of this report lays out the recent macroeconomic and social evolution of the region and the near-term challenges it faces,particularly in the realm of growth,trade,and balancing the fiscal accounts.Chapter 2 explores the implicat

57、ions for growth,social well-being,and governance of the continued influence of organized crime.O r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n1OV erV i ewChapter 1.Continued Recovery Amidst New ChallengesThe region continues to make progress re

58、ducing inflation although the convergence to the inflation targets has slowed,largely due to increased labor costs pushing up the prices of services and continued increases in international food prices.Inflation expectations remain anchored as all major countries expect to hit their targets by 2026

59、and monetary policies continue to ease;both nominal and real rates have begun to fall,except for Brazils.In the Caribbean,because many currencies are broadly pegged,the initial inflation shock was more modest and manageable,while both the Dominican Republic and Jamaicas targeting regimes have led to

60、 more inflation and slower reductions.Over the medium term,international headwinds are expected to be more challenging.Less certain decreases in near-term interest rate declines in the United States and Europe may limit the room for further local reductions as countries defend against capital outflo

61、ws and weak currencies.Higher rates will also contribute to modest growth in Group of Seven(G-7)countries,while China continues to struggle with a contracting real estate sector and declining consumer confidence.All these factors imply that commodity prices will soften.Growth in LAC is forecast to r

62、each 2.1 percent in 2025,driven by Argentinas recovery,with other major economies showing little dynamism.Tourism-based Caribbean countries will do better,with growth in St.Vincent and the Grenadines and Dominica likely to surpass 4 percent,although continued expansion will probably require increase

63、d connectivity and growth in hotel capacity.Commodity exporters such as Trinidad and Tobago and Suriname will see slight improvements in growth this year.On the financial front,the continued high interest rates will maintain the pressure on households and firms that has resulted in increases in non-

64、performing loans,although recent rate cuts have provided relief in some countries.These risks must continue to be monitored,although to date,banks appear to be well provisioned and international markets remain sanguine.Of more general concern are the ongoing global trade tensions that threaten marke

65、t access and which are likely to have a dampening effect on global growth.Higher tariffs,and the highest levels of trade uncertainty in a decade,impede further integration of the region into US supply chains,as well as imperiling jobs in export-related industries.The recently signed Mexico and Merco

66、sur agreements with the European Union represent a step toward diversification of markets and a continued relatively open stance toward the global markets.But the emerging challenges require addressing a now decades-old agenda in infrastructure,education,regulation,competition,and tax policy to incr

67、ease both productivity and the nimbleness of the regions economies in the face of new uncertainty.In addition,cuts to overseas development assistance will have varied impacts including weakening relief efforts in Haiti,weakening conservation of the Amazon in South America,and reducing humanitarian a

68、ssistance to Venezuelan migrants in host countries.On the fiscal front,government spending remains elevated,and deficits remain substantial.Debt service continues to be high,averaging 10.9 percent of government spending in the largest economies(LAC-6),importantly,driven by continued high interest ra

69、tes on the expanded stock of post-pandemic debt.Transitory transfers to vulnerable individuals and businesses during the COVID-19 pandemic are continuing to recedealbeit incompletely,while in many countries,other spending has not fallen or has increased.Overall,progress on debt reduction remains lim

70、ited:the debt-to-GDP ratio increased in 2024 to 63.3 percent and remains above the 2019 level of 59.4 percent.Overall,debt levels in the Caribbean remain stable,although several countriesBarbados,Belize and Jamaica in particularhave engineered impressively large declines of 26 percentage points to 4

71、0 percentage points of GDP in recent years.The entire region still needs to generate more fiscal space through gains in efficiency,spending reductions,and better designed tax systems.Some reduction in current account imbalances has occurred,though mostly due to stagnation in investment and increased

72、 private sector savings.This low public and private capital accumulation,combined with low productivity gains over the longer term,bodes ill for long-term growth.O r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n2OV erV i ewPoverty and InequalityP

73、rogress on poverty reduction continues to advance,albeit at a slower pace.Estimates for 2024 indicate that monetary poverty is expected to decrease marginally to 24.4 percent of LACs population from 25.0 percent in 2023(based on an upper-middle-income poverty line of$6.85 per day in 2017 purchasing

74、power parity terms),while inequality is expected to remain high by global standards,with a Gini coefficient of 49.9 percent.About 65 percent of the improvement in poverty from 2018 to 2023 was driven by a combination of transfers and stronger labor markets,in particular higher inflation-adjusted ear

75、nings.The brightest spots were in Brazil,Colombia,and Mexico,but given that these countries were already operating in a historically low unemployment rates by mid-2024,and transfers are retrenching in many countries,additional gains are more likely to be achieved by improving the quality of jobs thr

76、ough productivity growth.In Colombia,for example,a 1 percent rise in productivity can lead to almost a half point rise in wages with attendant falls in poverty.At present,labor productivity hovers between 20 percent and 60 percent of levels in Organisation for Economic Co-operation and Development(O

77、ECD)member states,suggesting room for gains with appropriate reforms.Raising modern sector productivity,along with improving the skills of the regions workers,are also critical to lowering the stubbornly high informality rate.Creating High Productivity Jobs:The Challenge ofArtificial Intelligence an

78、d the Energy Transition Though raising minimum wages from very low levels can increase wages and lower poverty,the long-term solution to social progress is to promote growth in the number of modern sector high-productivity jobs.Two shifts in the global economy,the emergence of artificial intelligenc

79、e(AI)and the evolution of the green economy,both offer challenges and opportunities to creating such jobs.While Generative AI(GenAI)has not been widely adopted in LAC,its potential to augment jobs(increase productivity)but also automate(and displace)workers has raised concerns in the advanced countr

80、ies.However,the technology is diffusing more slowly to LAC:at present,26 percent to 38 percent of employment is estimated to be exposed to GenAI,with 1 percent to 6 percent of employment the most vulnerableespecially jobs such as customer support agents and data entry clerks.Between 7 percent to 14

81、percent of jobs in LAC could become more productive through GenAI augmentation,particularly in sectors such as education,health,and personal services.However,to maximize the benefits of GenAI and minimize its potential to increase inequality,complementary policies are necessary,such as developing di

82、gital infrastructure,providing income support for displaced workers,and equipping workers with foundational skills.The energy transition has significant implications for labor demand and income inequality as well,by displacing jobs in traditional sectors while creating opportunities in new ones.Empl

83、oyment in sectors with relatively low greenhouse gas emissions is relatively low at about 10 percent,while employment in sectors with high greenhouse gas emissions,such as agriculture,is widespread.As with AI,emerging sectors will potentially require a different set of skills.As in most emerging sec

84、tors,providing workers with the education and skills to compete is a critical complementary policy.The Impact of Higher Return Migration Over the medium term,announced deportations from several advanced economiesbut especially the United Stateswill require integrating return migrants into local labo

85、r markets.Though total migration rose slightly over the 202124 period to 1.5 million per year from the historically high 201620 period of 1.4 million,both destination and origin countries have changed substantially in the past decade.More stringent migration norms in the United States have redirecte

86、d migrant flows from the United States to Latin America and Southern Europe,with approximately 20 percent of migrants destined for the United States,61 percent to other countries in the region,and the remainder to parts of Europe.That said,the largest share of total LAC migrants(55 percent)are conce

87、ntrated in the United O r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n3OV erV i ewStates,although that level is significantly down from a decade ago(68 percent).The humanitarian crisis in Repblica Bolivariana de Venezuela has made the country th

88、e source of 57 percent of total migrant flows from LAC,while net flows from Mexico have become negative over the past decade.Because of the overall expansion of migration,even with the historically high rates of deportation in the 202122 period,net flows to the United States remain positive.Remittan

89、ce flows remain high in some countriesamounting to more than 15 percent of GDP in Nicaragua,Honduras,El Salvador,Guatemala,Haiti,and Jamaica.These countries will see a slowdown in growthif not a continued fall in the case of Haiti.Finally,the rising tide of violence in the region driven by organized

90、 crime is leading to a deterioration in living conditions of the regions citizens,increasing uncertainty that impedes the necessary investment in capital and technology for productivity growth,as well as weakening the states capacity to respond to their needs.Chapter 2.Organized Crime and Violence i

91、n Latin America and theCaribbeanLACs traditional development challenges are increasingly compounded by the expansion of organized crime in the region beyond the countries where drug trafficking and criminal groups have been present for decadeslike Colombia,Brazil,or Mexicoto new countries and indust

92、ries.This expansion is not only a regional problem:LACs criminal groups are players in a vast international network where transnational organized crime groups are involved in a wide range of illegal activities from drugs to migrant trafficking to illegal mining and forestry.These groups are characte

93、rized by control and governance of territories;widespread extorsion,and state capture.Twelve LAC countries rank among the top fifty in 2023 by the Global Initiative Against Transnational Organized Crime(GI-TOC)s Criminality Score.Organized crime and violence obstruct the path to developmentOrganized

94、 crime poses numerous challenges,not only to citizen wellbeing but also to growth:uncertainty about property rights reduces and distorts investment;extortion and insecurity raise business transaction costs and reduce competitiveness;unproductive public security expenses divert resources away from he

95、alth,education,and infrastructure investments that can improve peoples lives;victims of violence experience reductions in their capacity to accumulate human capital;crimes targeting assets or property deplete physical capital;drug trafficking,illegal mining,and flora and fauna crimes deplete natural

96、 capital through deforestation and water contamination;communities living under organized crime rule see their basic freedoms compromised;control of state institutions weakens the quality of government and the delivery of critical services.Why is organized crime rising in LAC?While it is not easy to

97、 determine what is behind the escalation of organized crime in the region,a series overlapping factors may be contributing.During the 2010s,global demand for cocaine,illegal gold,and migrant smuggling boomed attracting new entrants.Government crackdowns after 2005 resulted in a reorganization of LAC

98、 organized crime groups and a new landscape of actors,old and new,competing for influence.The COVID-19 pandemic allowed criminal groups to gain legitimacy and power in areas where the state was not present,provided opportunities for groups to upgrade their businesses,and facilitated the recruitment

99、of impoverished populations.Expanded production and availability of arms have facilitated the growth of organized crime into new areas and markets.Technological innovation,including cryptocurrencies,have permitted the expansion of transnational groups.O r ga n i z e d C r i m e a n d V i O l e n C e

100、 i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n4OV erV i ewExcess lethal violence distinguishes organized crime in LAC from other regionsLethal violence in LAC is higher than in any other region of the world.LAC accounts for 9 percent of the global population but records one-third of all hom

101、icides.In the first decade of this century,the average homicide rate in LAC was 5.4 times larger than the worlds(22.0 homicides per 100,000 people versus 4.1)and the gap has widened in the last 20 years to 8.0.Homicide rates in LAC countries are very high relative to those with similar per capita in

102、come and inequality levels so while social conditions explain part of the high rates,other factors are at play.Survey-based victimization rates that capture“general criminality”(both lethal and non-lethal violent crimes as well as property crimes)are also high at 30 percent,on average,although only

103、three times higher than the worlds compared to eight times for homicides.There is an“excess”level of homicides in LAC,given what victimization rates would predict,arguably attributable to organized crime being more lethal in LAC.Weak institutions in critical areas fuel the problem instead of mitigat

104、ing itThe fight against organized crime is hampered by deficiencies in prison,police,and justice systems.Prisons:In addition to the persistent levels of overcrowding,high recidivism,and frequent imprisonment without sentencing,in many places in LAC organized crime groups have taken control of prison

105、s and they manage outside crime from within.As a result,prison objectives of incapacitation,deterrence,and resocialization become unattainable while prisons serve as recruitment posts for new gang members.Authorities need to regain control of prisons,improve conditions,and seek alternatives to incar

106、ceration.Further,the success of“mano dura”(firm hand)strategies is strongly context-specific,and these strategies often backfire.Police forces:The size of police forces in the region as a share of population varies widely across countries.However,it is impossible to say whether LAC countries are ove

107、r-or under-policed because factors other than size determine police effectiveness.Efficacy could be improved through better deployment across the territory,shifting of resources from patrolling to investigation,improved training and working conditions,and greater cooperation across agencies at the l

108、ocal and national levels and across countries.Trust in the police is among the lowest in the world and reforms need to be taken to cultivate it.Justice systems:The regions weak judicial systems imply that countries cannot detect,investigate,and dismantle complex criminal organizations with multiple

109、actors and layers or,at the very least,punish the criminals and activities that generate the worst welfare externalities for the regions citizens.Impunity is a significant problem.Part of this weakness may be due to ineffective performance indicators that do not provide the correct incentives for st

110、rategic effectiveness for law enforcement and officials across the various links in the criminal justice chain.Judicial authorities are also central to reducing incarceration.Regaining state control in areas where criminal organizations provide justice services requires bringing well-functioning jus

111、tice institutions.Supporting innovative dispute resolution mechanisms can be a first step.State action to fight organized crime requires a better understanding of how it operatesPart of the institutional weaknesses results from a lack of data or capacity to use the available data to inform the cours

112、e of action.A challenge is that organized crime has both visible elementslike lethal violenceand hidden aspects that are much harder to quantify.There are no systematic comparable official surveys that can be used to target policies.This chapter emphasizes the need for specialized recurrent surveys

113、and the smart use of administrative data,and calls attention to the role long-term,rigorous research can play in guiding state action.O r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n5OV erV i ewOrganized crime breeds in the absence of opportunit

114、iesThe lack of opportunitiesespecially for young men,who are the primary victims and main perpetrators of criminal violencefacilitates recruitment into criminal organizations.In many cases,recruits are not forced into crime,but criminal groups offer significantly better income opportunities than tho

115、se available in legal markets.They also offer career prospects and elements of “emotional mobility”(respect and recognition)aspects the precarious jobs in the regions licit markets often fail to provide.Policies to prevent recruitment targeted at high-risk youth must be prioritized in the fight agai

116、nst organized crime because they can help break criminal organizations access to their potential workforces.Actions can include targeted educational interventions,community-based prevention and protection,and resocialization of former criminals.Also,interventions addressing harmful masculinities and

117、 gender inequality can help replace norms that underlie the acceptability of different forms of violence with those that construct peaceful societies.Mentorship and emotional support programs,where young people can find role models outside the criminal context,have also proven effective.Prevention c

118、annot replace security policies but is a critical complement.Similarly,a good security policy without long-term prevention measures is likely to be insufficient.International coordination and collaboration are critical to face organized crimeLAC states face clear challenges in building the strategic

119、 capacity they need to manage organized crime,protect their citizens from their most harmful expressions,and give them equal opportunities to build the lives they want for themselves.However,they are unlikely to succeed on their own because organized crime is a problem that transcends national borde

120、rs and requires coordinated solutions.International collaboration needs to occur on several fronts,including cross-country platforms for exchanging informationacross customs and tax authorities,financial intelligence units,and criminal investigation units,standardization of probatory protocols,and p

121、resenting a united voice in the global conversation around drugs,firearms and financial flows.The scale and breadth of organized crime in LAC is arguably greater than ever.However,the region has faced this scourge before and,with the necessary reforms of governance,creation of opportunities for yout

122、h,and international collaboration,the current challenges can be met,and their threat to development reduced.O r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n6OV erV i ewGrowth Outlook for the RegionReal GDP Growth Rates 202220232024e2025f2026f202

123、7fArgentina5.3-1.6-1.85.54.54.0Bahamas10.82.61.91.11.21.3Barbados17.84.13.82.82.01.7Belize9.41.18.22.82.42.3Bolivia3.63.11.41.21.11.1Brazil3.03.23.41.82.02.0Chile2.20.52.62.12.22.1Colombia7.30.71.72.42.72.9Costa Rica4.65.14.33.53.73.8Dominica5.64.74.64.33.42.8Dominican Republic5.22.25.04.04.24.4Ecua

124、dor5.92.0-2.51.92.02.1El Salvador3.03.52.62.22.42.9Grenada7.34.73.73.83.42.7Guatemala4.23.53.73.53.83.8Guyana63.333.843.410.023.024.3Haiti-1.7-1.9-4.2-2.22.02.5Honduras4.13.63.62.83.43.7Jamaica5.22.6-0.71.71.71.6Mexico3.73.31.50.01.11.8Nicaragua3.84.63.63.43.33.3Panama10.87.42.93.53.84.3Paraguay0.25

125、.04.23.53.63.6Peru2.8-0.43.32.92.52.5St.Lucia20.42.23.72.82.31.9St.Vincent and the Grenadines5.05.84.54.92.92.7Suriname2.42.52.83.13.33.5Trinidad and Tobago1.11.41.72.81.33.2Uruguay4.50.73.12.32.22.2Source:World Bank staff calculations.Note:The cut-off date for the data is April 10,2025.“e”stands fo

126、r estimate;“f”for forecast.O r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n7OV erV i ewO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n8C H A P T ER 1The State of theLACRegionO r ga n i z e

127、d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n9Many assumptions about the direction of movement of the global economy have changed in the six months since the October 2024 Latin America and the Caribbean Economic Review(LACER)1.Inflation in the advanced coun

128、tries,instead of being vanquished as previously expected,looks to persist,delaying further interest rate cuts and constraining room for central banks in Latin America and the Caribbean(LAC)to further loosen monetary policy.The apparent shift toward higher tariffs by the United States casts uncertain

129、ty on the nearshoring project in LAC and global market access more generally,while LACs other principal market,China,continues to show sluggish growth.In addition,recent cuts to overseas development assistance by worlds largest economies could be consequential for several countries.Though over the l

130、ast decade,most migratory flows have been within LAC,increased return migration from the United States may stress some local labor markets and resources for reintegration,while dampening remittances.The global order will likely be in a state of flux for some time.Economic Activity:Growth Continues t

131、o LagOnce again in 2024,as in previous years,LAC was one of the slowest growing regions in the world(figure 1.1,panel a).Output growth continued to moderate,largely reflecting the continued convergence to potential output of Mexico,and the adjustment process in Argentina.Growth in Brazil remained ro

132、bust.The remaining large economiesChile,Colombia,and Peruexperienced a moderate uptick in growth,narrowing the output growth gap from their negative cyclical position.For 2025,growth is expected to slightly decelerate,with only Argentina and Colombia showing stronger performance than in 2024(figure

133、1.1,panel b).1 World Bank(2024a).FigUre 1.1.growth Continues to lag relative to Other regionsa.Growth by regionSouth AsiaEast Asia and PacifcSub-Saharan AfricaMiddle Eastand North AfricaEurope and Central AsiaLatin Americaand CaribbeanPercent20232024e2025f2026fAverage,201014Average,2015190123456789b

134、.Growth in the LAC-62025f2025f2025f2025f2025f-15-10-505101520202021202220232024e20202021202220232024e20202021202220232024e20202021202220232024e20202021202220232024e20202021202220232024e2025fArgentinaBrazilChileColombiaMexicoPeruPercentOutput gap growthOutput growthPotential output growth,average 201

135、019Source:World Bank Macro-Poverty Outlook(Spring Meetings 2025).Note:The values are based on projections(as of April 10,2025).In panel b,the LAC-6 includes Argentina,Brazil,Chile,Colombia,Mexico,and Peru.e=estimate;f=forecast;GDP=gross domestic product.CH a pte r 1|t H e stat e O F t H el aC r eg i

136、 O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n10Across the region in 2024,growth continued to be propelled by consumption,except for Argentina and Chile,where growth has been led by the external sector.In Mexico,public investment supported

137、 the expansion of aggregate investment and output growth during 2023,but as it lost momentum during 2024,this stimulus weakened.In the rest of the region,investment remained subdued,due to high interest rates and expectations of persistently low economic growth(figure 1.2).The slowdown in internal d

138、emand has contributed to correcting imbalances in the external sector.While fiscal deficits persist across the region,increases in net savings by the private sector have helped improve the external position in most countries(figure 1.3).FigUre 1.3.as Budget deficits remain,increased private savings

139、Has led to improvements in the Current account-10-8-6-4-20246810201920222023 2024e 201920222023 2024e 201920222023 2024e 201920222023 2024e 201920222023 2024e 201920222023 2024eArgentinaBrazilChileColombiaMexicoPeruPercent of GDPBudget balancePrivate savingsCurrent account balanceSource:World Bank M

140、acro-Poverty Outlook(Spring Meetings 2025).Note:The values are based on projections(as of April 10,2025).e=estimate;GDP=gross domestic product.FigUre 1.2.Consumption Continued to propel growth in most laC-6 CountriesContributions to real GDP growthArgentinaBrazilChileColombiaMexicoPeruPercent change

141、,year-on-yearPrivate consumptionPublic consumptionGross fxed capital formationInventoriesaNet exportsGDP2023:Q12024:Q12024:Q42025f2023:Q12024:Q12024:Q42025f2023:Q12024:Q12024:Q42025f2023:Q12024:Q12024:Q42025f2023:Q12024:Q12024:Q42025f2023:Q12024:Q12024:Q42025f-15-10-5051015Sources:Haver Analytics;Ba

142、nco Central de Chile;World Bank Macro-Poverty Outlook(Spring Meetings 2025);and World Bank staff calculations.Note:The values are based on projections(as of April 10,2025).f=forecast;GDP=gross domestic product.a.Inventories include statistical discrepancies.CH a pte r 1|t H e stat e O F t H el aC r

143、eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n11Households expectations continue to improve,supported largely by decreasing inflation and dynamic labor markets(figure 1.4,panel a).Business confidence remains stable around historical va

144、lues,consistent with sluggish investment rates(figure 1.4,panel b).This pattern suggests that low investment,rather than being only a cyclical phenomenon,is partially explained by LACs economic fundamentals.External EnvironmentExternal Headwinds Remain Challenging The external environment continues

145、to be challenging and is likely to remain so.On the positive side,in the third quarter of 2024,the US Federal Reserve(Fed)began to slowly normalize interest rates,a process that is expected to continue into 2025,easing financial conditions around the world.However,uncertainty remains about the speed

146、 of the interest rate decrease as the Fed delays further cuts,as well as the end point,which is likely to remain higher than in the pre-inflationary period(figure 1.5,panel a).Additionally,while commodity prices are below their 2022 peak,they remain high compared to pre-pandemic levels(figure 1.5,pa

147、nel c).On the negative side,output growth of LACs main trading partners continues to moderate.After a slowdown in 2024,growth in the G-7 is expected to continue moderating and reaching 1.2 percent in 2025,reflecting a moderation of the economy of the United States and the anemic growth in Europe(fig

148、ure 1.5,panel b).At the same time,Chinas prospects remain subdued and uncertain(figure 1.5,panel d).FigUre 1.4.Consumer Confidence Continues to rise,while Business Confidence remains stablea.Consumer confidence index92949698100102104106Index,100=Historical meanJan-19Jul-19Jan-20Jul-20Jan-21Jul-21Jan

149、-22Jul-22Jan-23Jul-23Jan-24Jul-24Jan-25Feb-25Mar-25b.Business confidence indexBrazilChileColombiaCosta RicaMexicoOECD92949698100102104106Index,100=Historical meanJan-19Jul-19Jan-20Jul-20Jan-21Jul-21Jan-22Jul-22Jan-23Jul-23Jan-24Jul-24Jan-25Feb-25Mar-25Sources:For panel a,OECD(Consumer Confidence Ind

150、ex(CCI)(indicator)(doi:10.1787/46434d78-en).For panel b,OECD Business Confidence Index(BCI)(indicator)(doi:10.1787/3092dc4f-en).Note:OECD=Organisation for Economic Co-operation and Development.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at

151、 i n a m e r i Ca a n d t H e Ca r i B B e a n12Heightening Uncertainty over Trade The less dynamic external scenario is complemented by increased uncertainty about trade policies in the regions main trading partners,from protective measures undertaken or under study by the largest economies(United

152、States,China,and the European Union)to realignments consistent with the nearshoring phenomenon.The Trade Policy Uncertainty Index shows that over the last 10 years uncertainty has increased,staying persistently above the levels observed before 2015(figure 1.6).This increased uncertainty in the world

153、s largest economies is especially relevant for LAC,as most countries have steadily made progress in integrating themselves into global value chains.Over the last two decades,LAC has increased its exports from 14.6 percent to 21 percent of GDP,with both the United States and China growing more import

154、ant as export markets.While the United States remains LACs main export destination,countries in LAC have sought to diversify their trading partners.Some countries like Chile and Peru have expanded their exports to China significantly(figure 1.7),and recently Mexico and Mercosur have pursued Free Tra

155、de Agreements with the FigUre 1.5.external Uncertainty will remain in 2025a.Fed funds rate and real yield on 10-year US Treasury Noteb.G-7 growth0123456Q1Q4 Q1Q4 Q1Q4 Q1Q4 Q1Q4 Q1Q42024e2025f2026fPercentFed funds rateReal yield on 10-year U.S.Treasury Note2019202020212022202320240123456202220232024Q

156、1Q1Q2Q3Q4Q2Q3Q4Q1Q2Q3Q42024e2025f2026fPercentc.Commodity pricesd.China growth10080120140160180200220240Index,2016=100Q1Q4 Q1Q4 Q1Q4 Q1Q4 Q1Q4 Q1Q42024e2025f2026f20192020202120222023202401234567Percent202220232024Q1Q1Q2Q3Q4Q2Q3Q4Q1Q2Q3Q42024e2025f2026fSources:For panel a,US Federal Reserve Economic D

157、ata(FRED),Federal Reserve Bank of St.Louis;for panel b,Organisation for Economic Co-operation and Development(OECD)Quarterly GDP(indicator)(doi:10.1787/b86d1fc8-en)and International Monetary Fund(IMF)World Economic Outlook(WEO)database(https:/www.imf.org/en/Publications/WEO/weo-database/2024/October

158、);for panel c,World Bank Commodity Prices(Pink Sheets)(https:/www.worldbank.org/en/research/commodity-markets)and IMF WEO database;for panel d,Haver Analytics and IMF WEO database.Note:f=forecast;G-7=Group of Seven.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V

159、i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n13European Union.While this increased integration has created ample opportunities for firms and workers,it also means that a significant share of workers is employed in exporting industries,and consequently,exposed to changes in int

160、ernational trade(figure 1.8).The sensitivity to changes in the global trade regime varies with the differing exports baskets to destination countries.While LAC exports mostly primary goods,39 percent of exports are manufactured goods,mostly from Brazil and Mexico to the United States.In contrast,exp

161、orts to China are focused almost exclusively on unprocessed food and mining.Thus,changes in global trade policies would be felt unevenly across countries and industries(figure 1.9).Even primary goods sectors will be challenged.FigUre 1.6.trade policy Uncertainty Has increased over the past decadeTra

162、de policy uncertainty indexIndexTarif threat on MexicoAnnounced tarifs on steel and aluminumTarifs on Chinese goods go into efectNew tarif threats on MexicoNew tarifs on Chinese goodsUS elections02004006008001000120014001600JanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanA

163、prJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanApr20122013201420152016201720182019202020212022202320242025 Source:Caldara et al.2020.Note:The index represents the proportion of news articles that contain references to trade policy uncertainty(TPU).A value of 100 i

164、n the index corresponds to 1 percent of articles mentioning TPU.FigUre 1.7.laC Has Been integrating into the worldExports by destination05101520253035200020232000202320002023200020232000202320002023ArgentinaBrazilChileColombiaMexicoPeruPercent of GDPChinaEuropean UnionUnited StatesRest of the worldS

165、ources:World Bank staff using data from the United Nations Department of Economic and Social Affairs(UN DESA)Statistics Division,National Accounts Main Aggregates and Commodity Trade(Comtrade)Database.Note:The figure focuses on the LAC-6(Argentina,Brazil,Chile,Colombia,Mexico,and Peru).CH a pte r 1|

166、t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n14In addition to disruptions in international trade,recent cuts in overseas development assistance(ODA)by some of the largest economies could be consequential f

167、or the region not only because some economies,like Haiti,are highly dependent on it,but also because it plays an important role for key policy challenges,such as Amazon conservation and humanitarian assistance to migrants from the Repblica Bolivariana de Venezuela.FigUre 1.8.workers in export indust

168、ries are exposed to Changes in international trade Domestic employment embodied in gross exports in 2019 in LAC-6 countries024681012ChinaUnitedStatesRest ofthe worldChinaUnitedStatesRest ofthe worldChinaUnitedStatesRest ofthe worldChinaUnitedStatesRest ofthe worldChinaUnitedStatesRest ofthe worldChi

169、naUnitedStatesRest ofthe worldArgentinaBrazilChileColombiaMexicoPeruPercent of total employmentAgriculture,forestry and fshingManufacturingMining and quarryingSource:World Bank staff using data from OECD,Trade in Employment(TiM)database(https:/www.oecd.org/en/data/datasets/trade-in-employment.html).

170、Note:The figure focuses on the LAC-6(Argentina,Brazil,Chile,Colombia,Mexico,and Peru).FigUre 1.9.laC export patterns Vary by trade partner Exports by destination and sector in 20230102030405060708090100United StatesChinaEuropeanUnionWorldUnited StatesChinaEuropeanUnionWorldUnited StatesChinaEuropean

171、UnionWorldUnited StatesChinaEuropeanUnionWorldUnited StatesChinaEuropeanUnionWorldUnited StatesChinaEuropeanUnionWorldUnited StatesChinaEuropeanUnionWorldArgentinaBrazilChileColombiaMexicoPeruLACPercentAgriculture and foodManufacturingMining and fuelsMiscellaneousStone,glass and woodSource:World Ban

172、k staff using WITS(World Integrated Trade Solution).Note:Manufacturing category includes machinery and electrical,rubber and chemicals,textiles and related,and transportation.Mining and fuels category includes metals,minerals and fuels.LAC=Latin America and the Caribbean.CH a pte r 1|t H e stat e O

173、F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n15It is impossible to know where the new tariff regime will settle.However,trade will remain an engine of growth for LAC.While the United States will remain a major export mar

174、ket worldwide,its share of global imports of goods has fallen to 13 percent,while LAC is increasingly diversifying its trade in a world that continues to pursue Free Trade Agreements and increased connection.Both Mercosur and Mexico have signed agreements with the EU,and presidents from the LAC regi

175、on have recently visited India and Japan and discussed trade.The nearshoring project,although it is certainly much more uncertain,is not necessarily moribund.With major Asian competitors under heavy tariffs,Mexico and LAC look more attractive.Further,the future of trade is increasingly in services,w

176、hich have grown as manufactures trade has slowed.For instance,India and China export both low-end and high-end(engineering)services,and this will be increasingly feasible with advances in translation and communication software.LAC remains underrepresented in this area:14 percent of LACs exports are

177、in services compared to 18 percent globally and,instructively,44 percent in India.With increases in services exports,on average,of 4.4 percent per year,LAC is growing slightly above the global average,but India,again,shows the possibilities,growing at 13.4 percent.Building resilience against changes

178、 going forward,and taking advantage of new opportunities,will require undertaking long-delayed reforms in education,infrastructure,behind the border regulations,and the overall enabling environment that disincentive investment and trade even before the recent changes in the global landscape.Between

179、the likely countermovement of exchange rates and the fact that certain policies,such as managerial extension programs,have been shown to achieve gains in firm productivity of 10 percent in a year,the currently discussed base level of tariffs need not be an insuperable barrier to access.Such producti

180、vity growth has proven elusive so far.Despite LACs comparative advantage in producing primary goods,the exporting sector is affected by the regions lack of competitiveness in the same way as the rest of the economy.The labor productivity embedded in LACs exports basket significantly lags that of the

181、 United States(figure 1.10).It may be,as some have argued,that globalization has changed in such a way that LAC cannot follow the paths of the Asian miracles.But it is also the case that the region has not engaged in the building of human capital,quality universities,and research institutes linked t

182、o the private sector,or more generally embraced the goal of getting to the technological frontier that the success stories have pursued.These steps will be essential to leverage both new and traditional sectors,as well as high-end services.What is clear is that access to new technologies,and taking

183、advantage of scale economies,will require maintaining an open stance toward the eventual system that emerges.FigUre 1.10.exporters productivity in laC lags Behind that of the United statesRelative Export Productivity Index in 2019 as percent of US productivity in gross exports0510152025303540ChinaUn

184、itedStatesWorldChinaUnitedStatesWorldChinaUnitedStatesWorldChinaUnitedStatesWorldChinaUnitedStatesWorldChinaUnitedStatesWorldArgentinaBrazilChileColombiaMexicoPeruPercentSources:World Bank staff using data from OECD,Trade in Employment(TiM)database(https:/www.oecd.org/en/data/datasets/trade-in-emplo

185、yment.html);Trade in Value Added(TiVA)(https:/www.oecd.org/en/topics/sub-issues/trade-in-value-added.html);and The Conference Board(https:/data-central.conference-board.org/).Note:The Relative Export Productivity Index measures the domestic value added per job in gross exports for each LAC-6 country

186、(Argentina,Brazil,Chile,Colombia,Mexico,and Peru),expressed as a percentage of the United States(US)level.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n16Inflation is Slowly Receding,while Mone

187、tary Policy Has Loosened After the decisive response of monetary authorities and the normalization in global supply chains,inflation receded significantly throughout the region from its peak in 2022.However,during 2024,the disinflation process slowed as core inflation remained high,largely due to in

188、creased labor costs affecting the prices of services and rising international food prices(figure 1.11).FigUre 1.11.inflation is moderating,but more slowly than anticipateda.Annual headline inflation(percent,year-on-year)0246810121416JanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJ

189、ulOctPercent201920202021202220232024BrazilChileColombiaMexicoPeruLAC(median)JanFebMar2025b.Annual core inflation(percent,year-on-year)02468101214PercentJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOct201920202021202220232024BrazilChileColombiaMexicoPeruJanFebMar2025c.Annual s

190、ervices inflation(percent,year-on-year)024681012PercentBrazilChileColombiaMexicoPeruJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOct2019202020212022202320242025JanFebMarSource:World Bank Macro-Poverty Outlook(Spring Meetings 2025).Note:LAC=Latin America and the Caribbean.LAC(

191、median)includes Argentina,Belize,Bolivia,Brazil,Chile,Colombia,Costa Rica,Dominican Republic,Ecuador,El Salvador,Guatemala,Honduras,Jamaica,Mexico,Nicaragua,Panama,Paraguay,Peru,Trinidad and Tobago,and Uruguay.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l

192、 e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n17Still,inflation expectations remain anchored as markets expect inflation to fall within central bank targets for all countries by the end of 2026.However,convergence to the target will require further efforts,necessitating a slower dec

193、line in interest rates than previously anticipated.A rise in Brazilian inflation in the middle of 2024,associated with increased food prices and labor costs,led to a reversal of previous interest rate reductions(figure 1.12).In Chile,inflation also increased during 2024,due to a combination of cost

194、factors:depreciation of the peso,and heightened real wages and electricity rates.However,during 2025,inflation is expected to moderate as internal demand remains weak,allowing the central bank to forgo possible interest rates increases.Considering the initially rapid decrease in inflation,the major

195、central banks of the region began normalizing their monetary policy rates more aggressively than most advanced economies in 2024,a trend that is expected to continue during 2025(figure 1.13,panel a).However,market expectations suggest that at least in the short to medium term,real interest rates wil

196、l not reach their relatively low levels of the 2010s for most countries,staying on average 2.4 percentage points higher,reflecting higher neutral rates for the region and for major economies(figure 1.13,panel b).The major currencies of the region have depreciated against the dollar during 2024 due t

197、o global factors,such as the relative strength of the dollar,and domestic ones,such as diminished interest rate differentials caused by monetary loosening(figure 1.14,panel b).The slower monetary policy relaxation in the United States puts further bounds on the ability of central banks in LAC to dec

198、rease interest rates if they wish to avoid further capital outflows and depreciations.While interest rate differentials for Brazil,Colombia,and Mexico are consistent with their historical levels,they are close to the minimum for Chile and Peru(figure 1.14,panel a).FigUre 1.12.inflation expectations

199、remain anchored Inflation forecasts and central banks targetsBrazilChileColombiaMexicoPeruPercent,year-on-yearInfation target rangeInfation in 2024Long-term forecastForecast for December 2025Forecast for December 20260123456TargetSource:Consensus Economics.Note:The survey date was April 2025 for the

200、 December 2025 and December 2026 forecasts,and April 2025 for the long-term forecasts.Long-term forecasts are period averages at the 610-year horizon.FigUre 1.13.monetary policy Has slowly loosened in the laC-5,except for Brazila.Monetary policy rates,January 2021 to March 2025 and projected(percent

201、)0246810121416Jan-21Jul-21Jan-22Jul-22Jan-23Jul-23Jan-24Jul-24Jan-25Feb-25Mar-25In 3 monthsIn 12 monthsPercentBrazilChileColombiaMexicoPeruFedCH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n18Fig

202、ure 1.13.Monetary Policy Has Slowly Loosened in the LAC-5,Except for Brazil(continuation)b.Real policy rates,January 2019 to March 2025 and projected(percent)-4-202468JanJulJanJulJanJulJanJulJanJulJanJulJanIn 12 monthsIn 24 monthsMexicoPeruFedPercentAverage,2010-19-4-2024681012BrazilChileColombiaPer

203、cent2019202020212022202320242025JanJulJanJulJanJulJanJulJanJulJanJulJan2019202020212022202320242025JanJulJanJulJanJulJanJulJanJulJanJulJan2019202020212022202320242025JanJulJanJulJanJulJanJulJanJulJanJulJanMarMarMarMarMarMar2019202020212022202320242025JanJulJanJulJanJulJanJulJanJulJanJulJan2019202020

204、212022202320242025JanJulJanJulJanJulJanJulJanJulJanJulJan2019202020212022202320242025In 24 monthsIn 24 monthsIn 24 monthsIn 24 monthsIn 24 monthsIn 12 monthsIn 12 monthsIn 12 monthsIn 12 monthsIn 12 monthsSources:World Bank Macro-Poverty Outlook(Spring Meetings 2025);Consensus Economics;central bank

205、s databases.Note:For panel b,real interest rates are calculated as the difference between the nominal monetary policy rate and the expected inflation rate for the next 12 months,based on data from central banks.For forecasted values,the same calculation is applied,using national central bank forecas

206、ts for the nominal policy rate.For inflation rates,the 12-month forecast uses expected inflation for 2026 from Consensus Forecasts,while the 24-month forecast uses the inflation target for each country.The series for Mexico contains breaks due to the unavailability of inflation expectations data in

207、December of each year since 2020,based on data from Bank of Mexico.LAC-5 includes Brazil,Chile,Colombia,Mexico,and Peru.Fed=US Federal Reserve.FigUre 1.14.major Currencies in the region Have depreciated due to a strong dollar and monetary looseninga.Interest rates differentials,January 2010March 202

208、5Difference between monetary policy rate and federal funds rateb.Exchange rates,January 2024March 2025Local currency per US dollar(USD)Percentage points-20246810121416BrazilChileColombiaMexicoPeruMar-2595100105110115120125Jan Feb Mar Apr May JunJul Aug Sep Oct Nov Dec Jan Feb MarIndex,2024:M1=100Bra

209、zilChileColombiaMexicoPeruNominal broad USD20242025Sources:World Bank staff calculations based on Haver Analytics and US Federal Reserve Economic Data(FRED),Federal Reserve Bank of St.Louis.Note:For panel a,each box plot provides a summary of the distribution of the interest rate differentials for t

210、he 201025 period.The central box represents the interquartile range(IQR),spanning from the first quartile(Q1,25th percentile)to the third quartile(Q3,75th percentile).The“whiskers”extend to the minimum and maximum values.For panel b,the nominal broad USD index measures the value of the US dollar(USD

211、)against a trade-weighted basket of foreign currencies.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n19Fiscal Sector:Fiscal Deficits and Debt Remain HighFiscal deficits remain stubbornly high i

212、n the largest economies of Latin America.While most countries have undertaken measures to address the primary deficit,such as phasing out the pandemic-era stimulus and proposed tax reforms to increase revenue,they have been unable to completely balance the fiscal budget as debt service requires incr

213、easing resources(figure 1.15).Hence,while the likelihood of a debt crisis along the lines of those of the 1980s and 1990s in Latin America is unlikely,the relatively high public debt is still proving costly.Debt service currently represents 10.9 percent of government spending in the LAC-6,crowding o

214、ut investment in items such as infrastructure to meet their citizens demands for public goods,as well as support for pension payments(figure 1.16).As discussed in the World Bank flagship report Public Spending Policies in Latin America and the Caribbean:When Cyclicality Meets Rigidities2,the rigidit

215、ies inherent in fiscal spending harm the ability of countries to navigate cyclical elements such as marked increase in interest rates.2 Riera-Crichton and Vuletin(2024).FigUre 1.15.Fiscal deficits persist significantly due to rising interest payments-10-8-6-4-20242018 2019 2022 2023 2024e 2018 2019

216、2022 2023 2024e 2018 2019 2022 2023 2024e 2018 2019 2022 2023 2024e 2018 2019 2022 2023 2024e 2018 2019 2022 2023 2024eArgentinaBrazilChileColombiaMexicoPeruPercent of GDPPrimary fscal balanceNet interestOverall fscal balanceSource:World Bank Macro-Poverty Outlook(Spring Meetings 2025).Note:The valu

217、es are based on projections(as of April 10,2025).e=estimate;GDP=gross domestic product.FigUre 1.16.debt service weighs Heavily on public spending,limiting investment051015202530354045502015-19 2022-23Average 2024e2015-19 2022-23Average 2024e2015-19 2022-23Average 2024e2015-19 2022-23Average 2024e201

218、5-19 2022-23Average 2024e2015-19 2022-23Average 2024e2015-19 2022-23AverageAverageAverageAverageAverageAverageAverageAverage2024eArgentinaBrazilChileColombiaMexicoPeruUnited StatesPercent of GDPCapital expenditureInterest paymentsOthers4421224438874435663343229910111345234122445353328343435212222172

219、222182020202119262727Source:World Bank Macro-Poverty Outlook(Spring Meetings 2025).Note:The values are based on projections(as of April 10,2025).e=estimate;GDP=gross domestic product.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e

220、 r i Ca a n d t H e Ca r i B B e a n20While higher interest rates are partly responsible for higher debt service,the persistent increment in government debt stock observed throughout the region over the last 15 years is just as important.After a surge during the pandemic,debt-to-GDP ratios have stab

221、ilized due to smaller deficits and the strong GDP growth during the reopening.However,in the absence of further fiscal consolidation,they are not expected to revert to the levels observed before the pandemic for most countries(figure 1.17).The October 2022 LACER,New Approaches to Closing the Fiscal

222、Gap,proposes a framework for improving fiscal accounts by increasing revenue mobilization in growth-friendly ways3.The latest increase in debt stocks occurs in the context of relatively high interest rates for LAC,which has historically faced abnormally high interest rates on government debt(figure

223、1.18,panel a).The cycle of monetary policy tightening increased borrowing costs for most LAC-5 governments(figure 1.18,panels b and c).The normalization of interest rates will help alleviate this cost,but it is unlikely to return to the levels observed during the past decade.For Colombia and Mexico,

224、sovereign risk premiums have also contributed to increase borrowing costs.Exposure to interest rate hikes depends on how indebted countries are.While most LAC-6 economies have increased their debt interest payments,for the less indebted countries,Chile and Peru,this increase is the result of increas

225、ing debt stocks.For the other countries,increased interest rates played an important role(figure 1.19).3 World Bank(2022).FigUre 1.17.public debt stabilized at High levelsGeneral government debt stock0102030405060708090100ArgentinaBrazilChileColombiaMexicoPeruSouth AmericaPercent of GDP20102025f2019

226、2024eSource:World Bank Macro-Poverty Outlook(Spring Meetings 2025).Note:The values are based on projections(as of April 10,2025).e=estimate;GDP=gross domestic product.FigUre 1.18.Borrowing Costs remain Higha.EMBI Global Diversified Subindexes,strip spread,regions050100150200250300350400BrazilChileCo

227、lombiaMexicoParaguayPeruUruguayEM AsiaEM EuropeBasis pointsAverage,202224LA7,average,202224CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n21Figure 1.18.Borrowing Costs Remain High(continuation)b

228、.Long-term government bonds:10-year,LAC-5024681012142021202220232024202120222023202420212022202320242021202220232024202120222023202420212022202320242021202220232024202120222023202420212022202320242021202220232024BrazilChileColombiaMexicoPeruPercentYieldSpreadAverage,201019Average,201019c.Implicit in

229、terest rate2468101214162018201920202021202220232024ePercentBrazilChileColombiaMexicoPeruUnited StatesSources:For panel a,World Bank staff calculations based on J.P.Morgan;for panel b,World Bank staff calculations based on Haver Analytics,Central Bank of Peru and US Federal Reserve Economic Data(FRED

230、),Federal Reserve Bank of St.Louis;for panel c,World Bank staff calculations based on World Bank Macro-Poverty Outlook(Spring Meetings 2025).Note:EM=emerging market;LAC=Latin America and the Caribbean.a.For panel a,the J.P.Morgan EMBI Global Diversified Index(EMBIGD)tracks liquid,US dollar-denominat

231、ed emerging market fixed,and floating-rate debt instruments issued by sovereign and quasi-sovereign entities.The Emerging Markets Bond Index(EMBI)spread reflects the difference between the yield on these instruments and the yield on US Treasury bonds of comparable maturity.Aggregates are simple aver

232、ages.EM Asia includes India,Indonesia,Malaysia,Philippines,Thailand.EM Europe includes Bulgaria,Hungary,Poland,Romania,Serbia.LA7 includes Brazil,Chile,Colombia,Mexico,Paraguay,Peru,Uruguay.b.For panel b,the spread shown in the chart represents the difference between the 10-year government bond yiel

233、ds of LAC-5 countries and the yield on the 10-year U.S.Treasury bond.The LAC-5 includes Brazil,Chile,Colombia,Mexico,and Peru.c.For panel c,the implicit interest rate is measured as the ratio of interest payments to the debt stock from the previous period.Converted to real terms with consumer price

234、index(CPI)from the U.S.Bureau of Labor Statistics.Values for implicit interest rates in 2024 are based on estimations(as of April 10,2025).2024e=2024 estimate.FigUre 1.19.more indebted Countries are more sensitive to interest rates HikesChange in interest payments,2018 versus 2024e-60-40-20020406080

235、ArgentinaBrazilChileColombiaMexicoPeruPercentChange explained by interest rateChange explained by debt stockTotal changeSource:World Bank Macro-Poverty Outlook(Spring Meetings 2025).Note:Converted to real terms with consumer price index(CPI)from the U.S.Bureau of Labor Statistics.The values are base

236、d on projections(as of April 10,2025).e=estimate.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n22Caribbean FocusThe Caribbean economies outperformed Latin American countries during 2024,albeit

237、with marked differences between tourism-dependent countries and commodity exporters(table 1.1).Tourism-dependent countries have recovered their pre-pandemic levels of GDP,boosted by the rebounding tourism sector.Some countries have already reached their pre-pandemic levels of tourist arrivals,sugges

238、ting a moderation in growth rates of the services sector,while others still have room to catch up.Further efforts in improving connectivity and hotel capacity would contribute to sustaining the momentum(figure 1.20,panel a).Among the commodities exporters countries,Trinidad and Tobago and Suriname w

239、ere severely affected by the sharp decline in commodity prices during the pandemic,leading to a commensurate decline in output.As prices have rebounded since 2021,even surpassing their pre-pandemic levels,GDP growth has accelerated but has not yet reached its 2019 level(figure 1.20,panel b).In Guyan

240、a,the exploitation of recently found oil fields has led to an impressive and sustained expansion of GDP since 2020.taBle 1.1growth prospects in the Caribbean exceed the regional average but Vary Real GDP growth estimates and forecastsCountry2024e2025fCommodity exportersTrinidad and Tobago1.72.8Surin

241、ame2.83.1Guyana43.410.0Tourism-dependentSt.Vincent and the Grenadines4.54.9St.Lucia3.72.8Jamaica-0.71.7Grenada3.73.8Dominica4.64.3Belize8.22.8Barbados3.82.8Source:World Bank Macro-Poverty Outlook(Spring Meetings 2025).Note:The values are based on projections(as of April 10,2025).e=estimate.f=forecas

242、t.FigUre 1.20.while tourism-dependent Countries Have recovered from pre-pandemic levels,Commodity exporters Have nota.Tourism-dependent countries201920202021202220232024e2025f201920202021202220232024e2025f201920202021202220232024e2025f201920202021202220232024e2025f201920202021202220232024e2025f20192

243、0202021202220232024e2025f201920202021202220232024e2025fBarbadosDominicaGrenadaJamaicaSt.LuciaSt.Vincent andthe GrenadinesBelize22%18%52%34%66%34%31%Index,2019=100Index,2019=100TouristsGDP(right scale)Services(right scale)7080901001101201301030507090110130CH a pte r 1|t H e stat e O F t H el aC r eg

244、i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n23Like the rest of Latin America,countries in the Caribbean experienced an important increase in inflation during 2022,associated with the dynamics of food and fuels in international markets.H

245、owever,because most of the Caribbean follows a currency peg monetary regime,the inflation peak was less severe than in the rest of Latin America.Jamaica and the Dominican Republic,two countries with inflation-targeting monetary policies,experienced the largest inflation surge,with considerable persi

246、stence.The normalization of prices since 2023 has contributed to bringing down inflation throughout the region(figure 1.21).Figure 1.20.While Tourism-Dependent Countries Have Recovered from Pre-Pandemic Levels,Commodity Exporters Have Not(continuation)b.Commodity exporters707580859095100105110406080

247、10012014016018020022020192020202120222023 2024e 2025f20192020202120222023 2024e 2025fTrinidad and TobagoSurinameGuyanaIndex,2019=100Commodity Export Price IndexGDP(right scale)Industry(right scale)67%31%20192020202120222023 2024e 2025fIndex,2019=10064%020040060080010001200140016001800909510010511011

248、5120125Sources:For panel a,World Bank Macro-Poverty Outlook(Spring Meetings 2025);Tourism Analytics;World Travel&Tourism Council(WTTC);and World Bank staff calculations;for panel b,World Bank Macro-Poverty Outlook(Spring Meetings 2025);UN Comtrade;and International Monetary Fund(IMF).Note:The values

249、 are based on projections(as of April 10,2025).For panel a,the ratio of tourism to GDP(2023)is shown in brackets;for panel b,the ratio of exports of goods to GDP(2023)is shown in brackets.e=estimate;f=forecast;GDP=gross domestic product.FigUre 1.21.the inflation surge is recedingAnnual headline infl

250、ation-50510152025-202468101220202021202220232024e20202021202220232024e20202021202220232024e20202021202220232024e20202021202220232024e20202021202220232024e20202021202220232024e20202021202220232024e20202021202220232024eDominicanRepublicJamaicaSt.LuciaSt.Vincent andthe GrenadinesTrinidadand TobagoGrena

251、daGuyanaBarbadosDominicaTotalFood(right scale)Transport(right scale)PercentCurrency PegInfation TargetingSources:World Bank Macro-Poverty Outlook(Spring Meetings 2025),Guyanas Bureau of Statistics,Barbados Statistical Service,International Monetary Fund(IMF)and World Bank staff calculations.Note:The

252、 values are based on projections(as of April 10,2025).e=estimate.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n24The path of public debt varies considerably across the Caribbean and Central Ame

253、rica regions.Economic growth and fiscal discipline have contributed to some countries making significant progress in lowering debt-to-GDP ratios,reaching levels significantly below the pre-pandemic situation.As noted in the October 2023 LACER4.Jamaicas use of the Economic Programme Oversight Committ

254、ee(EPOC)to ensure transparency and build societal consensus around fiscal discipline serves as a model for the LAC region.Similarly,Barbados and Belize,that have struggled with high debt over the past decade,have engaged in ambitious fiscal consolidation,managing to lower debt-to-GDP ratios substant

255、ially.In contrast,several highly indebted Caribbean countries still need to undertake measures to bring debt dynamics to more sustainable patterns(figure 1.22).Financial Sector:Non-Performing Loans Moderate,While Credit Growth Diverges across Subregions The monetary tightening process that started i

256、n 2022 has increased borrowing costs for households and businesses across the region,leading to a moderate rise in non-performing loans(NPLs).As central banks relax monetary policy,borrowing costs are expected to fall,leading a moderation in NPLs,a trend already observable in Brazil,Colombia,and Mex

257、ico.However,slower reductions in interest rates in advanced economies will limit the downward trajectory of domestic rates in LAC.Further,in Chile,despite interest rate declines,NPLs have steadily increased since 2022,albeit from a low level(figure 1.23).Credit growth continues to diverge between So

258、uth America and Central America and the Caribbean.Most South American countries have exhibited weak credit growth,having been unable to reach their pre-pandemic trend(figure 1.24,panel a).A noteworthy exception is Paraguay,where credit growth has recently accelerated to more than 9 percent per year.

259、In contrast,Central America and the Caribbean have exhibited significantly faster growth,consistent with their rapid economic growth(figure 1.24,panel b).4 World Bank(2023).FigUre 1.22.the path of public debt Varies across the Caribbean and Central america regionsGeneral government debt stock0153045

260、6075901051202024e201920202025fPercent of GDPHaitiGuatemalaNicaraguaHondurasTrinidadand TobagoDominicanRepublicGuyanaCosta RicaPanamaBelizeSurinameJamaicaGrenadaSt.LuciaEl SalvadorSt.Vincent andthe GrenadinesBarbadosDominicaSources:World Bank Macro-Poverty Outlook(Spring Meetings 2025).Note:The value

261、s are based on projections(as of April 10,2025).e=estimate;f=forecast;GDP=gross domestic product.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n25FigUre 1.23.despite moderation in non-performing

262、 loans,Vigilance is still necessaryShare of non-performing loans to total gross loans,LAC-5 BrazilChileColombiaMexicoPeruPercentStart of interest rate hike cycleEnd of interest rate hike cycleTotal Non-fnancial corporationsHouseholds0123456789Feb-21Jun-21 Jun-23Nov-23Sep-21Jan-24Aug-23Jul-21May-21Ju

263、l-23201820192020202120222023202420252018201920202021202220232024202520252018201920202021202220232024201820192020202120222023202420182019202020212022202320242025Source:World Bank staff calculations based on national statistics.Note:Household debt is composed of mortgages and consumption loans.Non-per

264、forming loans are loans for which the contractual payments are delinquent,defined as the NPL ratio being overdue for more than 90 days in the case of Brazil,Chile,Mexico and Peru,and 30 days in the case of Colombia.FigUre 1.24.Credit growth diverges among laC economiesReal credit growth(annual movin

265、g average)a.South America and Mexico-25-20-15-10-50510152019:Q12020:Q12021:Q12022:Q12023:Q12024:Q12019:Q12020:Q12021:Q12022:Q12023:Q12024:Q12019:Q12020:Q12021:Q12022:Q12023:Q12024:Q12019:Q12020:Q12021:Q12022:Q12023:Q12024:Q12019:Q12020:Q12021:Q12022:Q12023:Q12024:Q12019:Q12020:Q12021:Q12022:Q12023:Q

266、12024:Q12019:Q12020:Q12021:Q12022:Q12023:Q12024:Q12019:Q12020:Q12021:Q12022:Q12023:Q12024:Q12019:Q12020:Q12021:Q12022:Q12023:Q12024:Q1ArgentinaBrazilChileColombiaMexicoBoliviaEcuadorParaguayUruguayPercentb.Central America and the Caribbean-10-5051015202019:Q12020:Q12021:Q12022:Q12023:Q12024:Q12019:Q

267、12020:Q12021:Q12022:Q12023:Q12024:Q12019:Q12020:Q12021:Q12022:Q12023:Q12024:Q12019:Q12020:Q12021:Q12022:Q12023:Q12024:Q12019:Q12020:Q12021:Q12022:Q12023:Q12024:Q12019:Q12020:Q12021:Q12022:Q12023:Q12024:Q12019:Q12020:Q12021:Q12022:Q12023:Q12024:Q1Costa RicaDominican RepublicGuatemalaHondurasJamaicaPa

268、namaEl SalvadorPercentSource:World Bank staff calculations based on Haver Analytics.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n26Labor Markets and Social Conditions:Recent Trends and Future

269、ProspectsEconomic Growth and Poverty Reduction Have SlowedSocial progress in key variables,such as monetary poverty,has closely followed economic performance across emerging regions.In LAC,the poverty rate dropped by 17.4 percentage points during the 200313“Golden Decade”of high commodity prices and

270、 robust growth.However,as economic growth slowed,poverty reduction also decelerated,with a modest 7.4 percentage point decrease from 2013 to 2024(figure 1.25).In contrast,regions with more sustained GDP and labor productivity growth,such as East Asia and the Pacific(EAP),reduced poverty more aggress

271、ively in both periods(figure 1.26).EAP,led by Chinas strong performance,caught up to LACs poverty rate.FigUre 1.25.the pace of poverty reduction tracks economic growth across emerging regionsPoverty rates by world region,2000242000200120022003200420052006200720082009201020112012201320142015201620172

272、01820192020202120222023e2024fPercentage of populationEast Asia&Pacifc(EAP)East Asia&Pacifc w/o China(EAP w/o China)Latin America&Caribbean(LAC)Middle East&North Africa(MENA)Sub-Saharan Africa(SSA)WorldEAP:83.5EAP:51.3EAP:24.7EAP w/o China:81.8EAP w/o China:60.1EAP w/o China:48.5LAC:49.2LAC:31.8LAC:2

273、4.4MENA:54.8MENA:44.3MENA:44.9SSA:91.7SSA:88.1SSA:87.3World:66.9World:53.2World:43.60102030405060708090100Sources:World Bank staff calculations based on Regional Poverty and Inequality Update,Latin America and the Caribbean,October 2024(World Bank 2024b).Data for the LAC region are drawn from the Wo

274、rld Bank Group LAC Equity Lab Database,while data for other regions are sourced from the World Bank Group Poverty and Inequality Platform(PiP).Data for China are obtained from the World Bank Group Macro Poverty Outlook(last updated:April 10,2025).Note:The figure uses a poverty line for upper-middle-

275、income countries of$6.85/day in 2017 PPP terms.The LAC regional aggregate is based on 18 countries in the region for which microdata were available at national level.In cases where data were unavailable,values have been estimated using a combination of methods,including microsimulations,and then poo

276、led to create regional estimates.Due to substantial methodological revisions in Mexicos official household survey in 2016,which resulted in a discontinuity in the poverty series,a break has been introduced in the LAC-18 series from 2015 onward.For other regions,the 2023 and 2024 values were estimate

277、d by the nowcasting model implemented by PiP.The estimate for East Asia and the Pacific(without China)is derived by subtracting Chinas data on the poor population and total population from the East Asia and Pacific aggregates published by PiP.e=estimate;f=forecast;PPP=purchasing power parity;w/o=wit

278、hout.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n27Key Drivers of Poverty ReductionLAC exhibits diverging trends in poverty reduction(figure 1.27).While most countries reduced poverty at a sl

279、ower pace during the 201823 period than during the 201318 period,in Brazil,Colombia,and Mexico,poverty reduction accelerated,largely as result of improved labor markets.The dynamics of labor markets and public transfers explain most(more than 65 percent)of poverty reduction in LAC across this period

280、.The performance of real earningsprimarily determined by the ability of nominal labor earnings to keep pace with inflationwas the most crucial driver,surpassing the impact of employment levels.Public transfers FigUre 1.27.laCs poverty reduction trends improved in Brazil and mexico,while most Other C

281、ountries Faced setbacks in 201823Contribution of household income sources to changes in poverty rate Largest economiesSouthern ConeAndean RegionCentral AmericaCaribbean141210864202462013182018232013182018232013182018232013182018232013182018232013182018232013182018232013182018232013182018232013182018

282、23201318201823201318201823201318201823201318201823201318201823BrazilMexico ArgentinaChileParaguay UruguayBolivia Colombia EcuadorPeruCostaRicaEl SalvadorHonduras Panama DominicanRep.Percentage pointsLabor markets EmploymentLabor markets EarningsPublic transfersOthersTotal change in poverty rateSourc

283、e:World Bank staff calculations based on SEDLAC(CEDLAS-World Bank)(last updated:October 2024).Note:The figure uses a poverty line for upper-middle-income countries of$6.85/day in 2017 purchasing power parity(PPP)terms.The“Others”category includes remittances,retirement and pensions,demographics(shar

284、e of individuals aged 1564),and other non-labor income.FigUre 1.26.laCs poverty reduction slowed in the last decade and was Outpaced by regions with stronger growthEconomic growth,labor productivity growth,and poverty reduction,2000242003-132013-242003-132013-242003-132013-24East Asia&Pacifc(EAP)Eas

285、t Asia&Pacifc w/o China(EAP w/o China)Latin America&Caribbean(LAC)Annualized GDP growth(%)Annualized labor productivity growth(%)Annualized reduction in poverty rate(in pp.)5.604.302.662.083.691.275.213.911.801.511.630.003.222.412.171.051.740.67012345678Source:World Bank staff calculations based on

286、SEDLAC(CEDLAS-World Bank),Macro Poverty Outlook,Poverty and Inequality Platform(PiP),and Word Development Indicators(WDI).Note:GDP measured in real terms.Labor productivity is GDP(in constant 2021 international dollars,PPP)per person employed.The figure uses a poverty line for upper-middle-income co

287、untries of$6.85/day in 2017 PPP terms.pp=percentage points;PPP=purchasing power parity;w/o=without.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n28also played a vital role,both in increasing ga

288、ins(as in Brazil,through the Bolsa Familia program)and in cushioning the setbacks in poverty reduction.As the pandemic-era public transfers return,albeit incompletely,to their pre-2020 levels(figure 1.28),and governments grapple with fiscal concerns,poverty reduction is expected to become even less

289、reliant on this channel in the upcoming years.Thus,moving forward,the evolution of labor markets will be increasingly critical in the fight against poverty.Employment and Labor Income TrendsBy mid-2024,employment rates had largely returned to pre-pandemic levels,with some exceptions among specific g

290、roups(figure 1.29).Moreover,the three largest economies in the regionBrazil,Mexico,and Argentinawere already operating at historically low unemployment rates by mid-2024(figure 1.30).This makes it unlikely that substantial social gains will be achieved,at least in the short term,by increasing employ

291、ment.Thus,social policies should focus on job quality rather than quantity.FigUre 1.28.public transfers Have mostly returned to pre-pandemic levels amidst limited Fiscal spaceAverage public transfer amount per household and average share of public transfer in total family income2017 PPP dollars 0246

292、8101214161820020406080100120140160180200LACArgentinaBoliviaBrazilCosta RicaDominican Rep.EcuadorPeruPercent20192020202120222023Share in total family income(right scale)Source:World Bank staff calculations based on SEDLAC(CEDLAS-World Bank).Note:The bars for LAC present a simple/unweighted average of

293、 seven countries:Argentina,Bolivia,Brazil,Costa Rica,Dominican Republic,Ecuador,and Peru.LAC=Latin America and the Caribbean;PPP=purchasing power parity.FigUre 1.29.employment rates were mostly Back to pre-pandemic levels by mid-2024,with a Few exceptionsEmployment-to-population ratio Employment-to-

294、population ratio in2024:Q2 (Indexed to 2018:Q2=100)ABCDE708090100110120130BrazilMexicoArgentinaChileParaguayUruguayBoliviaColombiaEcuadorPeruCosta RicaEl SalvadorHondurasPanamaDominicanRep.TotalMaleFemaleYouthPrime-ageSeniorA.Largest economiesB.Southern ConeC.Andean RegionD.Central AmericaE.Caribbea

295、nSource:World Bank staff calculations using ILO(International Labour Organization)Modelled Estimates Database,ILOSTAT database(https:/ilostat.ilo.org/data/).Note:The employment-to-population ratio is total employment divided by working-age population.Due to data availability,for Bolivia,the compared

296、 periods are 2023:Q4 and 2018:Q4;for El Salvador,Honduras,and Panama,they are 2023 and 2018.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n29Labor income presents a mixed picture.Up to 2023,aver

297、age real individual labor income was mostly stagnant or decreasing throughout the region(see dotted lines in figure 1.31).This trend was particularly evident among the middle class in multiple countries,where labor income struggled to keep pace with inflation.However,in Brazil and Mexico,relatively

298、better performance in the lower income deciles allowed these countries to still reduce poverty.In addition,the relative tightness of labor markets after the pandemic has accelerated the pace of real wage growth for most countries,most notably in Mexico,Colombia,and Brazil.FigUre 1.30.the three large

299、st economies in the regionBrazil,mexico,and argentinawere already Operating at Historically low Unemployment rates by mid-2024Unemployment rate,201924 ABCDE0510152025BrazilMexicoArgentinaChileParaguayUruguayBoliviaColombiaEcuadorPeruCosta RicaEl SalvadorHondurasPanamaDominicanRep.Percent of the labo

300、r force201920202021202220232024Average 2015-19A.Largest economiesB.Southern ConeC.Andean RegionD.Central AmericaE.CaribbeanSource:World Bank staff calculations using ILO(International Labour Organization)Modelled Estimates Database,ILOSTAT database(https:/ilostat.ilo.org/data/).The data in the plot

301、are primarily from the second quarter of each year.However,for Bolivia,the data correspond to the fourth quarter.For El Salvador,Honduras,Panama,and Paraguay,the data are reported annually.Note:The unemployment rate is total unemployment divided by the labor force.FigUre 1.31.labor income was stagna

302、nt in most Countries,with gains in lower income deciles in Brazil,Colombia,and mexicoa.Annualized real individual labor income growth by decile,201823PercentLargest economiesSouthern ConeAndean RegionCentral AmericaCaribbean-6-4-2024681 2 3 4 5 6 7 8 910 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2

303、 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 910 1 2 3 4 5 6 7 8 910 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 910 1 2 3 4 5 6 7 8 910BrazilMexicoArgentinaChileBoliviaEcuadorPeruCosta RicaPanamaDominicanRep.By income decileTotalb.Annualized real wage growth,202123-4-202468ArgentinaBoliviaPanama

304、ChileEcuadorPeruCosta RicaBrazilColombiaDominican Rep.MexicoPercentSource:World Bank staff calculations based on SEDLAC(CEDLAS-World Bank).Note:For Argentina,data have only urban coverage.In panel a,for Chile,the 2017 value is used for 2019,and the 2022 value for 2023;for Mexico,the 2018 value is us

305、ed for 2019 and the 2022 value for 2023.In panel b,for Chile and Mexico,the 2020 value is used for 2021,and the 2022 value for 2023.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n30Increasing th

306、e availability of jobs in higher-productivity,better-paying firms is one of the main channels through which the poverty gains of the previous decade can be extended.However,jobs available in LAC have largely stagnated since 2018 in dimensions such as employer size and informality(figures 1.32 and 1.

307、33),suggesting that,in accordance with low productivity growth,jobs offer no better opportunities today than they did in 2018.Recent global trends on artificial intelligence and the green transition present opportunities to create high-productivity and high-paying jobs(boxes B1.1 and B1.2).FigUre 1.

308、32.employment in most laC Countries is Highly Concentrated in small Firms with 14 workersEmployment composition by firm size Share of total employment(%)ABCDE0204060801002014:Q22018:Q22024:Q22014:Q22018:Q22024:Q22014:Q22018:Q22024:Q22014:Q22018:Q22024:Q22014:Q22018:Q22024:Q22014:Q22018:Q22024:Q22014

309、:Q22018:Q22024:Q22014:Q22018:Q22024:Q22014:Q22018:Q22024:Q22014:Q22018:Q22024:Q22014:Q22018:Q22024:Q22014:Q22018:Q22024:Q2BrazilMexico ArgentinaChileParaguay UruguayBoliviaColombia EcuadorPeruCostaRicaDominicanRep.Not stated50+persons5-49 persons1-4 personsA.Largest economiesB.Southern ConeC.Andean

310、RegionD.Central AmericaE.CaribbeanSource:World Bank staff calculations using ILO(International Labour Organization)Modelled Estimates Database,ILOSTAT database(https:/ilostat.ilo.org/data/).Note:Due to data availability,for Bolivia,the compared periods are 2023:Q4,2017:Q4,and 2015:Q4;for Uruguay,the

311、y are 2014:Q2,2018:Q2,and 2021:Q2.FigUre 1.33.laCs low growth,lack of skills and tough labor rules perpetuate the large informal sectorEmployment breakdown by institutional sector and formalityABCDE0204060801002018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q

312、22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q2BrazilMexico ArgentinaChileParaguay UruguayBolivia Colombia EcuadorPeruCostaRicaEl Salvador Panama DominicanRep.Share in total employment(%)Private informalPublicPrivate formalA.Largest economie

313、sB.Southern ConeC.Andean RegionD.Central AmericaE.CaribbeanSource:World Bank staff calculations using ILO(International Labour Organization)Modelled Estimates Database,ILOSTAT database(https:/ilostat.ilo.org/data/).Note:Due to data availability,for Bolivia the compared periods are 2023:Q4 and 2018:Q

314、4;for El Salvador and Panama,they are 2023 and 2018.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e a n31A substantial body of literature indicates that informal self-employment often emerges as a d

315、esirable(and often higher-paying)alternative to low-productivity formal jobs that poorly educated workers can access.5 In the case of LAC,the persistently high informality rates arise in the interplay between low formal sector growth,costly labor market regulations,and lack of skills(figure 1.34),wh

316、ich limit the supply of attractive formal sector alternatives.Growth-enhancing reforms that increase labor productivity are the main long-term channel to revitalize real labor earnings.As well-established in the literature and evidenced across the region,there is a positive association between labor

317、 productivity growth,employment,and real labor earnings growth(figure 1.35).Moreover,there is significant potential to improve labor productivity in the region.Pre-pandemic estimates by economic sector place overall productivity at just 20 percent to 60 percent of levels in Organisation for Economic

318、 Co-operation and Development(OECD)member states,with considerable variation across sectors(figure 1.36).Despite the positive association between productivity and labor earnings,it is an open question whether there are labor market institutions that prevent the pass-through from being higher,and wha

319、t reforms might increase it.5 See Perry et al.(2007).FigUre 1.34.most of the informal labor Force Has Basic or less-than-Basic educationInformal employment breakdown by educational attainmentABCDE0204060801002018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22

320、024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q22018:Q22024:Q2BrazilMexico Argentina ChileUruguay Bolivia Colombia EcuadorPeruCostaRicaEl Salvador Panama DominicaRep.Less than basicBasicIntermediateAdvancedNot statedA.Largest economiesB.Southern ConeC.Andean RegionD.Centr

321、al AmericaE.CaribbeanSource:World Bank staff calculations using ILO(International Labour Organization)Modelled Estimates Database,ILOSTAT database(https:/ilostat.ilo.org/data/).Note:Due to data availability,for Bolivia the compared periods are 2023:Q4 and 2018:Q4;for El Salvador and Panama,they are

322、2023 and 2018.FigUre 1.35.labor productivity growth leads to real labor earnings growth across the regionCorrelation between annual growth rates of employees real monthly earnings and labor productivity,200022 0.050.120.160.180.260.290.310.350.380.410.430.000.100.200.300.400.50PeruMexicoChileParagua

323、yDominicanRepublicBrazilEcuadorUruguayBoliviaArgentinaColombiaPearson correlation coefcientSource:World Bank staff calculations using ILO(International Labour Organization)Modelled Estimates Database;ILOSTAT database(https:/ilostat.ilo.org/data/);National AccountsAnalysis of Main Aggregates(AMA)Data

324、base;UN-DESA database(https:/unstats.un.org/unsd/snaama/);and World Economic Outlook(WEO).Note:Labor productivity is measured as real GDP per worker.Monthly earnings have been adjusted for inflation using the Consumer Price Index(CPI).The figure illustrates the“contemporaneous”correlation,which does

325、 not account for dynamic pass-through effects that could result in a delayed transmission of labor productivity gains to real employee earnings gains.CH a pte r 1|t H e stat e O F t H el aC r eg i O nO r ga n i z e d C r i m e a n d V i O l e n C e i n l at i n a m e r i Ca a n d t H e Ca r i B B e

326、a n32Acknowledging Social Progress and Future ChallengesOverall,it is important to acknowledge the impressive gains in poverty reduction in LAC over the past two decades,while recognizing that the pace of this progress has significantly slowed and that,for most countries in the region,much more rema

327、ins to be doneespecially when compared to the average OECD poverty rate(figure 1.37).In terms of reducing income inequality,more moderate advances have been made in lowering the Gini coefficient.However,by the end of 2024,most of the region remained above the World Banks high inequality threshold,de

328、fined by a Gini coefficient greater than 40(figure 1.38).FigUre 1.36.the potential for labor productivity improvement is significantLabor productivity as a percentage of the OECD average,2018 0102030405060708090100BoliviaEcuadorParaguayColombiaBrazilArgentinaMexicoUruguayChileLabor productivity(%of

329、OECD average)AgricultureMiningManufacturingUtilitiesConstructionTrade servicesTransport servicesFinance and business servicesOther servicesTotalSource:World Bank staff calculations using harmonized series from the WBG Aggregate and Sectoral Productivity Database database(https:/prosperitydata360.wor

330、ldbank.org/en/dataset/WB+ASPD)(last updated:March 27,2024).Note:Labor productivity is measured as real GDP per worker(at PPP-adjusted 2011 international dollars).OECD average excludes countries from Latin America and the Caribbean.OECD=Organisation for Economic Co-operation and Development;PPP=purch

331、asing power parity.FigUre 1.37.poverty reduction gains in laC over the past two decades Have Been impressiveEvolution of poverty rates LACBrazilMexicoArgentinaChileParaguayUruguayBoliviaColombiaEcuadorPeruCosta RicaEl SalvadorGuatemalaHondurasPanamaDominicanRep.Poverty headcount ratio(%of population

332、)2008201920232024e2025fOECD averageA.LAC aggregateB.Largest economiesC.Southern ConeD.Andean RegionE.Central AmericaF.CaribbeanABCDEF010203040506070Source:World Bank Macro Poverty Outlook(April 2025,forthcoming).Note:The figure uses a poverty line for upper-middle-income countries of$6.85/day in 201

333、7 PPP terms.For Argentina,data have only urban coverage.For Brazil,Costa Rica,the Dominican Republic,Honduras,Mexico,and the LAC aggregate,due to survey and methodological changes,the 2008 value is not entirely comparable with the rest of the series.For Colombia,Paraguay,and Uruguay,due to survey and methodological changes,values from 2023 onward are not entirely comparable with the rest of the se