The reduction of poverty has a positive impact on a country like Peru, since rising incomes improve the consumption of citizens, affirmed Gian Maria Milesi-Ferretti, member of the Research Department at the International Monetary Fund.
The National Institute of Statistics and Informatics (INEI) announced poverty rate in Peru shrank by 22.7% in 2014, which means 289,000 Peruvians were taken out of poverty.
“The poverty reduction impact is positive; first, because it implies further incomes, which is positive for the economy; and second, because it improves the social harmony,” he said.
The reduction of this rate, which represented a decrease of 1.2 percentage points last year, continued the favorable trend experienced over the last years, despite Latin America’s stagnation in poverty reduction since 2012, according to data from the Economic Commission for Latin America (ECLAC).
Milesi-Ferretti said international investments have increased their presence in emerging markets, such as Peru. Investors decide to do so because these markets offer higher potential growth rates and a better macro economic management compared to previous decades.
In certain occasions, they make short-term investments; however, he ruled out a massive outflow of capital in view of external problems, such as the normalization of monetary policy in the United States (tapering).
“As long as macro-economic stability and credibility of economic policies is maintained, I think there is no reason to believe investors will move out,” he added.
(END) JCC/JJN/RMB
Published: 4/24/2015