MPO 04/2025 Latin America and the Caribbean MACRO POVERTY OUTLOOK Country-by-country Analysis and Projections for the Developing World © 2025 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclu- sions 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 of the data included in this work. The boundaries, colors, denominations, and other information shown on any map 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. Rights and Permissions The material in this work is subject to copyright. 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Argentina Guyana Bahamas, The Haiti Barbados Honduras Belize Jamaica Bolivia Mexico Brazil Nicaragua Chile Panama Colombia Paraguay Costa Rica Peru Dominica Saint Lucia Dominican Republic Saint Vincent and the Grenadines Ecuador Suriname El Salvador Trinidad and Tobago Grenada Uruguay Guatemala Latin America and the Caribbean Macro Poverty Outlook / April 2025 1 This outlook reflects information available as of April 10, 2025. 1 2 ARGENTINA Population Poverty million millions living on less than $6.85/day 45.7 4.0 3 4 Life expectancy at birth School enrollment Substantial progress has been achieved in addressing years primary (% gross) macroeconomic imbalances. Inflation is decelerating, the twin deficits have been eliminated, economic activity is 76.1 108.7 5 6 recovering, and the Central Bank’s balance sheet is gradually GDP GDP per capita strengthening. Real GDP is projected to grow by 5.5 percent current US$, billion current US$ in 2025. Poverty is estimated at 13.3 percent by end-2024. However, balancing inflation reduction with the removal of 641.4 14037.0 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2023 (2017 PPPs). 3/ 2022. exchange rate and capital controls poses significant risks. 4/ 2022. 5/ 2024. 6/ 2024. than that of many regional peers (estimated at 13.3 percent in 2023 Key conditions and challenges under the international poverty line of $6.85 per day, 2017 PPP), it has been rising in recent years, unlike most of Latin America. Argentina boasts vast natural resources, a highly skilled workforce, and strong comparative advantages in agroindustry, as well as select- ed manufacturing and service sectors. Despite this potential, the Recent developments country has faced recurring macroeconomic crises over the past decades. Weak macroeconomic management, primarily driven by The stabilization program has delivered remarkable results. Real the monetary financing of fiscal deficits, has led to persistently high GDP contracted by 1.8 percent in 2024, but economic activity be- inflation, capital and exchange rate controls, and mounting debt. gan to rebound in the second half of 2024, driven by revived investment and private consumption. Month-on-month inflation In December 2023, authorities launched an ambitious macroeco- decelerated from 25 percent in December 2023 to 2.4 percent nomic stabilization program to eliminate the fiscal deficit and, con- in February 2025. Large spending cuts helped reverse an overall sequently, its monetary financing. The program also sought to cor- fiscal deficit of 4.6 percent of GDP in 2023 into an estimated sur- rect relative price misalignments, strengthen the Central Bank’s plus of 0.7 percent of GDP in 2024. Accordingly, sovereign risk balance sheet, and deregulate the economy. premium declined from 2,000 basis points (bps) in end-2023 to around 750 bps in February 2025. To strengthen the business environment, the government enacted a special regime for large investments, lowered tariffs, eliminated A 55 percent devaluation of the peso in December 2023, followed import licenses, and reduced export taxes. by a 2 percent monthly crawling peg in 2024 (reduced to 1 percent in February 2025), anchored inflation expectations and significantly Balancing structural reforms while protecting the most vulnerable narrowed the exchange rate premium. Initially driven by the de- remains a challenge. Although Argentina’s poverty rate is lower valuation and import payment management—and later by the tax FIGURE 1 / Central government primary balance and monthly CPI FIGURE 2 / Actual and projected poverty rates and real GDP per inflation capita Percent of GDP Percent Poverty rate (%) Real GDP per capita (constant LCU) 2.5 30 18 20000 2.0 18000 16 1.5 25 14 16000 1.0 20 14000 0.5 12 12000 0.0 10 15 10000 -0.5 8 8000 -1.0 6 10 6000 -1.5 4 4000 -2.0 5 2 2000 -2.5 -3.0 0 0 0 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Oct-24 Jan-25 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate Primary balance (lhs) Monthly inflation (rhs) Upper middle-income pov. rate Real GDP pc Sources: National Institute of Statistics and Censuses (INDEC), and Ministry Source: World Bank. Notes: See footnotes in table on the next page. of Economy. 2 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. amnesty—the Central Bank purchased over US$23bn. However, reforms. Disinflation is expected to continue, supported by con- net reserves only improved modestly, from -US$11bn in December tinued fiscal discipline and tighter monetary policies. 2023 to an estimated -US$6bn in February 2025, due to debt pay- ments to bondholders and multilateral institutions, as well as Cen- Fiscal balance is expected to remain the cornerstone of the eco- tral Bank interventions in the parallel exchange market. The cur- nomic program. The federal government's primary fiscal surplus rent account surplus is estimated at 1.0 percent of GDP in 2024. By is projected at 1.3 percent of GDP in 2025 and increase to 2.5 December 2024, however, the inflation and the exchange rate-peg percent by 2027, ensuring an overall fiscal balance. Public debt differential led the multilateral real exchange rate to return to lev- is expected to decline from 79 percent of GDP in 2025 to 69 els observed in November 2023. percent in 2027. Monetary policy initially relied on negative real interest rates to re- Important gains in reducing the exchange rate premium, coupled duce Central Bank’s remunerated liabilities but later shifted to keep with a credible fiscal and monetary program, are expected to en- the broad monetary base stable at 8 percent of GDP. able a gradual unification of exchange rates. The recovery of the external sector—supported by a growing trade surplus and finan- Poverty peaked at 18 percent of the population during H1 2024 cial inflows, including debt issuance and multilateral support—will (international poverty line of US$6.85 per day, 2017 PPP) up from help rebuild foreign reserves. 13.3 percent in H2 2023. However, declining inflation and ex- panded social transfer programs helped lower poverty to 13.3 The poverty rate is projected to decline to 12.7 percent by 2025, percent in H2 2024. While real wages are recovering, household as real wages grow and the social safety net system continues sup- incomes remain fragile. From November 2023 to November 2024, porting the most vulnerable populations. 186,000 formal job losses—mostly in the private sector—pushed many workers into informal employment. Unemployment rose The outlook remains subject to significant downside risks. External from 5.7 percent in 2023 to 7.7 percent in Q2 2024, stabilizing at threats include commodity price fluctuations, adverse climate con- 6.9 percent in Q3 2024. ditions, and tighter global monetary policies. Domestic vulnerabil- ities stem from a weaker-than-expected economic recovery and limited legislative support for reforms. Balancing inflation control Outlook with the gradual removal of exchange rate controls presents con- siderable challenges. Furthermore, a slower decline in the sover- Real GDP is projected to rebound to 5.5 percent in 2025 and eign risk premium could delay Argentina’s re-entry into global cap- reach 4.0 percent by 2027, driven by investments in energy (oil ital markets, a crucial step for managing foreign currency debt and gas), agriculture and mining exports, and market-oriented obligations starting in 2026. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 5.3 -1.6 -1.8 5.5 4.5 4.0 Private consumption 9.4 1.0 -3.3 3.5 2.6 2.5 Government consumption 3.0 1.5 -7.5 5.5 3.5 1.1 Gross fixed capital investment 11.2 -2.0 -18.2 17.5 8.8 6.8 Exports, goods and services 4.6 -7.5 19.8 3.8 5.2 4.6 Imports, goods and services 17.8 1.7 -11.8 10.2 4.4 2.6 Real GDP growth, at constant factor prices 5.1 -1.5 -1.8 5.5 4.5 4.0 Agriculture -2.8 -22.9 24.0 -2.1 3.5 2.2 Industry 5.6 -0.2 -5.8 4.8 4.0 4.1 Services 6.0 0.8 -2.6 6.9 4.9 4.2 Employment rate (% of working-age population, 15 years+) 56.4 56.6 56.6 56.7 56.8 56.9 Inflation (private consumption deflator) 69.9 131.1 228.6 36.0 14.5 9.4 Current account balance (% of GDP) -0.6 -3.2 1.0 -0.4 -0.4 0.0 Net foreign direct investment inflow (% of GDP) 2.1 3.2 1.4 0.8 1.3 1.1 1 Fiscal balance (% of GDP) -4.7 -4.6 0.7 0.5 0.9 1.4 Revenues (% of GDP) 34.2 34.0 33.1 34.0 34.8 34.8 1 Debt (% of GDP) 89.7 174.3 84.8 78.9 74.6 68.8 1 Primary balance (% of GDP) -2.7 -2.7 2.5 2.0 3.2 3.7 2,3 International poverty rate ($2.15 in 2017 PPP) 0.6 0.5 0.5 0.5 0.5 0.5 2,3 Lower middle-income poverty rate ($3.65 in 2017 PPP) 2.5 2.6 2.6 2.5 2.4 2.4 2,3 Upper middle-income poverty rate ($6.85 in 2017 PPP) 10.9 13.3 13.3 12.7 12.4 12.2 GHG emissions growth (mtCO2e) 2.9 -3.3 -2.2 2.8 2.5 2.4 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Fiscal data refer to the general government. 2/ Calculations based on SEDLAC harmonization, using 2023-EPHC-S2. Actual data: 2023. Nowcast: 2024. Forecasts are from 2025 to 2027. 3/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 3 This outlook reflects information available as of April 10, 2025. 1 THE BAHAMAS Population Poverty million 0.4 .. 2 3 Life expectancy at birth School enrollment The Bahamas’ economy has rebounded to pre-pandemic years primary (% gross) levels thanks to robust tourism. Despite limited diversification and external vulnerabilities, the country is making significant 74.4 77.9 4 5 progress toward economic stability. The primary surplus GDP GDP per capita achieved in 2024 helped reduce public debt. Although growth current US$, billion current US$ may moderate, fiscal consolidation and resilience efforts should persist. The Bahamas needs to navigate global uncer- 14.9 37022.0 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2022. 3/ 2023. 4/ 2024. 5/ 2024. tainties while maintaining stability and reducing poverty. Key conditions and challenges Recent developments The Bahamas is a small island state, highly dependent on Real GDP grew by an estimated 1.9 percent in 2024, compared tourism, particularly from the United States, Canada, and the to 2.6 percent in 2023. Tourism was the main driver of growth, United Kingdom. Although economic activity has rebounded to though it was tempered by limited accommodation capacity and pre-pandemic levels, growth remains limited by the economy’s a normalization in air arrivals. Cruise ship calls increased by ap- small size, a lack of diversification, high import dependence, proximately 20 percent in 2024, boosting total arrivals by 16 per- hotel infrastructure capacity limits, vulnerability to extreme cent and total room nights stays by 6 percent. Labor force par- weather and external shocks, skill shortages, and limited fiscal ticipation returned to pre-pandemic levels, reaching 73.4 percent space. The country also faces elevated public debt levels and (69.8 for women and 77.4 percent for men) in 2024Q2. However, significant gross financing needs. The Central Bank has main- methodological changes in the labor force survey prevent com- tained a strict 1:1 peg between the Bahamian dollar and the parisons with previous years. Unemployment stood at 8.7 per- U.S. dollar (USD) since 1973. cent in the first half of the year, with youth unemployment at 19.6 percent in 2024Q2. Notably, 78 percent of the unemployed As of 2013 (the most recent data), 12.8 percent of the population have at least completed secondary education and 15.6 percent lived below the national poverty line, and the Gini coefficient was hold a tertiary degree. The high percentage of unemployed edu- 41.1, surpassing the World Bank’s high inequality threshold of cated individuals and employed youth lacking field-specific train- 40. The cost of a healthy diet in 2022 was higher than the Latin ing may indicate a misalignment between education, training, American average and has been increasing since 2017, although and job opportunities. food insecurity was low. In 2022, The Bahamas ranked 57th in the Human Development Index with a value of 0.82, matching its Fiscal adjustment was supported by improved tax compliance, Caribbean peers and remaining stable since 2013. cyclical revenue rebound, and expenditure containment. The FIGURE 1 / Real GDP growth and sectoral contributions to real FIGURE 2 / Fiscal balance and public debt GDP growth Percent, percentage points Percent of GDP Percent of GDP 20 100 6 4 15 80 2 10 60 0 5 40 -2 0 -4 20 -5 -6 2021 2022 2023 2024e 2025f 2026f 2027f 0 -8 Agriculture Industry 2021 2022 2023 2024e 2025f 2026f 2027f Services Net taxes on production Real GDP growth Debt (lhs) Fiscal balance Primary balance Source: World Bank. Source: World Bank. 4 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. government achieved a primary surplus of 2.9 percent of GDP and innovation in agriculture, could further reduce economic risks in FY2023/24, up from 0.3 percent in FY2022/23. The overall for the poor. deficit contracted to 1.3 percent of GDP from 3.8 percent in FY2022/23, due to a 7.7 percent increase in revenues and a 3.7 decrease in expenditures. Consequently, central gov- Outlook ernment public debt decreased to 84.0 percent of GDP and external debt to 34.6 percent. The current account deficit GDP growth is expected to decelerate to 1.1 percent in 2025, 1.2 widened to 9.2 percent of GDP mainly because of a deteri- percent in 2026, and 1.3 percent in 2027, aligning with its long-term oration in the trade balance. It has been financed primarily potential growth rate. The economy will continue to rely on strong through government external borrowing and foreign direct tourism activity in 2025, especially on cruise ship arrivals, and relat- investments. Gross international reserves stood at US$ 2.6bn ed investment projects. Inflation is expected to converge to 2 per- at the end of 2024, covering 4.4 months of imports. Credit cent in the medium-to-long term. Fiscal consolidation is set to con- to the private sector grew by 5.5 percent in 2024, exceed- tinue, with the fiscal balance turning to surplus in FY2025/26 and ing the expansion of deposits, while the share of loans that the primary surplus remaining above 4.0 percent of GDP due to were in arrears or non-performing improved to 2.6 and 5.5 implementation of tax reforms and further containment of expen- percent, respectively. ditures. The current account deficit is expected to improve slowly due to the stronger performance of the tourism sector, while the Inflation moderated significantly in 2024, after averaging 3.1 per- debt-to-GDP is expected to continue its downward trend. In the cent in 2023, and has been negative since July. Hotel and restau- baseline scenario, the Central Bank is set to maintain, to the extent rant prices fell by 2.6 percent annually, reflecting internation- allowed by the currency peg, an accommodative policy stance. al competitive pressures. With the currency peg limiting discre- tionary monetary policy, domestic interest rates are closely fol- Risks to the outlook include uncertainty in trade policy that could lowing the U.S. Federal Reserve’s policies. The year-on-year in- impact investment and growth and potential global economic and flation rate is estimated at -0.2 percent in 2024, with average financial shocks. Extreme weather events and geopolitical conflicts annual inflation at 0.4 percent. The decline in inflation was also could impact global commodity prices, raise inflation, and disrupt driven by lower food and beverage, gasoline, and diesel prices. food supply chains. Additionally, weaker-than-expected growth in The government's effort to strengthen resilience to climate haz- advanced economies could reduce tourist arrivals. All of which would ards in food supply chains, through enhanced local production place additional pressure on the welfare of the most vulnerable. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 10.8 2.6 1.9 1.1 1.2 1.3 Private consumption 2.4 8.0 0.6 1.6 0.9 1.2 Government consumption 12.8 4.5 3.7 1.7 1.5 1.5 Gross fixed capital investment -5.6 4.5 2.0 4.9 1.5 2.2 Exports, goods and services 43.1 4.5 0.1 0.3 1.2 1.4 Imports, goods and services -2.2 10.7 2.3 0.2 0.9 2.0 Real GDP growth, at constant factor prices 13.6 5.0 1.9 1.1 1.2 1.3 Agriculture -0.4 26.9 0.1 0.7 1.3 1.4 Industry -11.7 10.3 9.5 2.7 2.7 2.7 Services 16.9 4.3 1.1 0.9 1.0 1.1 Employment rate (% of working-age population, 15 years+) 64.6 65.2 65.2 65.2 65.2 65.2 Inflation (consumer price index) 5.6 3.1 0.4 1.0 1.6 1.9 Current account balance (% of GDP) -8.0 -6.4 -9.2 -9.2 -8.5 -7.6 Net foreign direct investment inflow (% of GDP) 2.4 2.6 3.2 3.2 3.2 3.0 1 Fiscal balance (% of GDP) -3.8 -1.3 -1.1 0.2 0.4 0.6 Revenues (% of GDP) 20.4 21.1 22.4 23.4 23.4 23.4 1 Debt (% of GDP) 89.8 84.3 84.0 78.7 76.2 75.2 1 Primary balance (% of GDP) 0.3 2.9 3.3 4.6 4.8 4.8 GHG emissions growth (mtCO2e) 6.6 3.6 1.4 1.2 1.5 1.7 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Fiscal balances are reported in fiscal years (July 1st -June 30th). Macro Poverty Outlook / April 2025 5 This outlook reflects information available as of April 10, 2025. 1 2 BARBADOS Population Poverty thousand thousands living on less than $6.85/ day 282.5 30.9 3 4 Barbados recorded three years of robust economic growth Life expectancy at birth School enrollment years primary (% gross) post-pandemic, as tourism rebounded. However, the econo- my remains small, dependent on tourism, and vulnerable to 77.7 93.4 natural disasters. Despite following a declining path, public 5 6 debt remains high, and debt service reduces fiscal space. The GDP GDP per capita current US$, billion current US$ government is committed to the Barbados Economic Recov- ery and Transformation (BERT) 2022 plan to reduce debt, 7.2 25365.8 promote green energy, and enhance competitiveness. Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2016 (2017 PPPs). 3/ 2022. 4/ 2023. 5/ 2024. 6/ 2024. challenges given increased spending on old-age pensions Key conditions and challenges and Barbados’ aging population. Barbados faces several challenges as a small island state with an economy reliant on tourism and imports, vulnerable to ex- Recent developments treme weather and external financial shocks. High public debt level, though decreasing, leads to high debt service and re- Real GDP is estimated to have expanded by 3.8 percent in duced fiscal space. The government is committed to imple- 2024, compared to 4.1 percent in 2023. Growth was robust menting the BERT 2022 plan which aims to reduce public debt across sectors, especially tourism, business services, construc- to about 60 percent of GDP by 2035/36, promote green energy, tion, and manufacturing, although agriculture contracted due diversify the economy, enhance competitiveness, invest in edu- to adverse weather conditions. Increased airline capacity and cation and health, provide affordable housing, and strengthen international events, contributed to a 10.7 percent rise in social safety nets. tourist long-stay arrivals and higher hotels’ earnings. Cruise passenger arrivals surged by 40.8 percent in 2024, with a 14.1 In 2016/17, 11.1 percent of Barbadians lived below the interna- percent increase in cruise calls. Credit to the non-financial pri- tional upper middle-income country poverty line of $6.85 2017 vate sector increased by 4.4 percent in 2024, led by real estate PPP per day. Poverty was higher among women, girls, and and professional services. people in female-headed or larger households. As of 2022, the National Assistance Program (NAP)—the Barbados Wel- The average consumer price index inflation rate decreased to 2.3 fare Department’s main social assistance program—reached percent in 2024 from 5.0 percent in 2023, supported by lower in- around 6,500 households, or around 6 percent of house- ternational commodity prices and receding domestic inflation. The holds, with cash assistance. The National Insurance Scheme fiscal deficit for FY23/24 stood at 1.6 percent of GDP, with a (NIS), which provides social insurance, faces longer-term primary surplus of 3.8 percent. Public debt fell to 100.3 percent FIGURE 1 / Real GDP growth and sectoral contributions to real FIGURE 2 / Fiscal balance and public debt GDP growth Percent, percentage points Percent of GDP Percent of GDP 20 140 6 15 120 4 100 10 2 80 5 0 60 0 -2 40 20 -4 -5 2021 2022 2023 2024e 2025f 2026f 2027f 0 -6 Agriculture Industry 2021 2022 2023 2024e 2025f 2026f 2027f Services Net taxes on production Real GDP growth Debt (lhs) Fiscal balance Primary balance Source: World Bank. Source: World Bank. 6 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. of GDP, while external debt service increased 0.3 percentage points to 3.0 percent of GDP. In the first three quarters of Outlook FY24/25, the government achieved a primary surplus of 5.3 percent of GDP, due to increased corporate tax revenues, fol- GDP growth is expected to decelerate to 2.8 percent in 2025, 2.0 lowing the November 2023 tax reform, with an overall surplus percent in 2026, and 1.7 percent in 2027. The economy is expected of 1.5 percent of GDP. to benefit from significant tourism activity in 2025, with positive spillovers to other sectors. The government continues to invest in The trade deficit widened as imports rose by 1.9 percent year-on- renewable energy projects, sustainable tourism, and disaster pre- year and exports fell by 0.3 percent. The services surplus widened paredness, which are crucial for sustainable and inclusive growth. due to higher tourism receipts while higher interest payments on debt worsened the income account deficit. The current account Inflation is expected to stabilize around its historical average of 2.4 deficit narrowed to 5.9 percent of GDP, compared to 8.6 percent in percent due to the easing of global commodity prices and lower 2023. International gross reserves reached a record US$ 3.1 billion, domestic service prices. Fiscal consolidation is set to continue, with covering 31.2 weeks of imports. the government planning to increase revenues through tax re- forms and improve fiscal institutions. A fiscal surplus is expected in In June 2024, the unemployment rate was 7.7 percent, down 2026, and the primary surplus is expected to remain above 4.0 per- from 8.5 percent in June 2023, despite an increase in the labor cent of GDP. The current account deficit is projected to decrease to force participation rate from 62.6 percent to 63.5 percent over remain close to 6 percent of GDP while debt-to-GDP is expected to the same period. Employment growth was strongest in the man- fall below 90 percent by 2027. With slower growth, poverty reduc- ufacturing and education sectors, while wholesale and retail tion is also forecast to slow, with the share of Barbadians living on trade and accommodation and food services remained Barbados’ less than $6.85 2017 PPP per day decreasing from 9.2 percent in largest employers. 2025 to 8.5 percent in 2027. With robust growth and contained inflation, poverty has likely de- However, risks to the outlook persist, including uncertainty in trade creased in the last five years. The share of Barbadians living on less policy that could impact investment and growth, potential global than $6.85 2017 PPP per day is estimated to have dropped from economic and financial shocks, extreme weather events, and es- 15.5 percent in 2021 to 9.2 percent in 2025, reflecting the country’s calating conflicts in other parts of the world, which could impact post-pandemic recovery. tourist arrivals and raise inflation. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 17.8 4.1 3.8 2.8 2.0 1.7 Real GDP growth, at constant factor prices 16.3 4.2 3.8 2.8 2.0 1.7 Agriculture -18.0 9.4 -4.7 2.1 2.3 1.6 Industry 8.5 -1.3 4.0 2.6 2.1 1.8 Services 19.0 5.1 4.0 2.8 2.0 1.6 Employment rate (% of working-age population, 15 years+) 57.6 57.4 57.3 57.2 57.1 57.0 Inflation (consumer price index) 4.9 5.0 2.3 2.4 2.4 2.4 Current account balance (% of GDP) -9.4 -8.6 -5.9 -6.2 -5.8 -5.9 Fiscal balance (% of GDP) 0.2 -3.7 -1.6 -0.2 0.2 0.4 Revenues (% of GDP) 26.8 25.1 26.6 26.1 26.1 26.1 Debt (% of GDP) 113.8 110.7 100.3 95.7 91.1 86.7 Primary balance (% of GDP) 4.5 3.8 3.8 4.3 4.4 4.3 1,2 International poverty rate ($2.15 in 2017 PPP) 1.2 1.1 1.1 1.1 1.1 1.1 1,2 Lower middle-income poverty rate ($3.65 in 2017 PPP) 2.8 2.3 2.2 1.9 1.8 1.7 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) 11.3 10.3 9.8 9.2 8.8 8.5 GHG emissions growth (mtCO2e) 4.6 0.7 0.5 0.4 0.5 0.7 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on CONLAC harmonization, using 2016-BSLC. Actual data: 2016. Nowcast: 2017-2024. Forecasts are from 2025 to 2027. 2/ Projection using neutral distribution (2016) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. Macro Poverty Outlook / April 2025 7 This outlook reflects information available as of April 10, 2025. 1 2 BELIZE Population Poverty thousand thousands living on less than $6.85/ day 412.3 75.6 3 4 After recovering from the COVID-19 pandemic with robust Life expectancy at birth School enrollment years primary (% gross) growth and debt reduction, Belize must tackle long-term structural challenges to reduce poverty and inequality and 71.0 97.0 sustain growth. The economy, reliant on tourism, agriculture, 5 6 and remittances, faces challenges such as limited credit and GDP GDP per capita current US$, billion current US$ inadequate infrastructure. GDP growth reached 5.4 percent in 2024, driven by tourism and construction. However, it is 3.5 8526.8 expected to slow, with risks from global uncertainty. Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2018 (2017 PPPs). 3/ 2022. 4/ 2023. 5/ 2024. 6/ 2024. population was multidimensionally poor according to Belize’s na- Key conditions and challenges tional definition. Multidimensional poverty rates are higher in rural areas (30.9 percent) compared to urban areas (9.7 percent), with Belize, an upper middle-income country, relies heavily on tourism, the Toledo district experiencing the highest rates (67.9 percent). agriculture, and remittances for foreign exchange. Its economic Poverty is particularly pronounced among children aged zero to 14 health is closely tied to the United States, which is its primary (30.5 percent), households with children (27.2 percent), Belizeans source of tourists and remittances, the main destination for its ex- of Maya descent (56 percent), large households (42.4 percent in ports, and a key investor. Belize's economy is sensitive to energy households with 7+ members), and households with an uneducat- price fluctuations because of its status as a net importer of oil and ed head (36 percent). Extreme weather events have significantly gas and its exchange rate being pegged to the US dollar. Addition- contributed to poverty over the past decades. The high prevalence ally, the country faces significant risks from natural disasters. Be- of informal employment, which disproportionately affects migrants lize has made significant progress in stabilizing the economy by en- and youth, has also been linked with higher poverty rates. hancing fiscal discipline and reducing public debt through debt re- structuring and blue bond issuance. Belize is also improving fiscal management by making its fiscal policy more countercyclical. How- Recent developments ever, the business environment still faces major challenges, includ- ing limited credit availability for the private sector, inadequate in- GDP growth is estimated at 8.2 percent in 2024, up from 1.1 frastructure, skill shortages, and high crime rates. percent in 2023, primarily driven by a surge in tourist arrivals, electricity and water production, and construction. Average infla- Poverty rates had been increasing in the two decades of limited tion was 3.3 percent in 2024, with notable increases in food and growth before the pandemic. Since the peak of the pandemic, beverages (5.6 percent) and restaurants and accommodation (7.4 monetary and multidimensional poverty rates have started to de- percent). The current account deficit widened to 1.5 percent of cline. As of September 2024, approximately 22.1 percent of the GDP in 2024, from 0.6 percent of GDP deficit in 2023, mainly FIGURE 1 / Real GDP growth and sectoral contributions to real FIGURE 2 / Actual and projected poverty rates and real GDP per GDP growth capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 25 25 16000 20 14000 20 12000 15 15 10000 10 8000 5 10 6000 0 4000 5 -5 2000 2021 2022 2023 2024e 2025f 2026f 2027f 0 0 Agriculture Industry 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Services Net taxes on production International poverty rate Lower middle-income pov. rate Real GDP growth Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: See footnotes in table on the next page. 8 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. due to a surge in imports. Belize's monetary policy has focused on participating at a rate of 43.6 percent compared to 69.7 percent supporting economic stability and growth, with the exchange rate for men (down from 44.5 and 71.4 percent respectively in 2023). remaining pegged to the US dollar. The Central Bank of Belize has In 2024, 15.0 percent of the population is estimated to live on less maintained adequate international reserves to anchor the curren- than US$6.85/day (2017 PPP). cy peg, covering four months of imports at the end of 2024. Be- lize has achieved and maintained a primary surplus in recent years, supported by improved revenue efforts and expenditure control. Outlook The primary surplus is projected to remain just below 1 percent of GDP, while overall fiscal deficit is expected to remain stable at GDP growth is expected to decelerate to an average 2.5 percent about 1.5 percent of GDP. Revenues are estimated to decline from in the coming years, with inflation decreasing from 2.1 percent in 22.9 percent of GDP in FY2023/24 to 22.5 percent in FY2024/25, 2025 to 1.3 percent in 2027. The primary surplus is projected to while total expenditure is estimated to decline from 24.4 to 24.2 remain just below 1 percent of GDP, while overall fiscal deficit is percent of GDP. expected to remain stable at about 1,5 percent of GDP. Resum- ing principal payments on the Blue Bond after the grace period The financial sector showed some improvement in 2024. The Cen- will further pressure fiscal space. The current account deficit is tral Bank's vigilance and the authorities' efforts to strengthen the expected to increase to about 2.0 percent of GDP in the medium Anti-Money Laundering/Countering the Financing of Terrorism term. The debt-to-GDP ratio will gradually decrease but remain (AML/CFT) framework were positive developments. Domestic above 60 percent. banks maintained strong regulatory capital, and nonperforming loans decreased. However, challenges persist, including pressures In line with expected GDP growth, poverty is expected to decline in specific loan portfolios, increased corporate insolvencies, and over the coming years. By 2027, the poverty rate is expected to tight liquidity in some banks, which continue to constrain real pri- reach 14.1 percent. vate sector credit growth. Risks to the outlook are skewed to the downside. A sharper eco- Positive labor market trends are beneficial for poverty reduc- nomic deceleration in origin countries would translate into few- tion, with unemployment decreasing sharply from 3.9 percent er tourist arrivals and lower growth, while a slower path of fed in September 2023 to 2.1 percent in September 2024. Howev- rate cuts could hamper debt dynamics. Higher than anticipated er, labor force participation remains low at 56.3 percent, and import inflation would increase domestic inflation and widen the gender disparities in labor outcomes remain high, with women current account deficit. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 9.4 1.1 8.2 2.8 2.4 2.3 Private consumption 10.4 1.5 5.7 5.0 3.0 2.0 Government consumption 6.6 5.3 9.4 2.5 2.3 1.1 Gross fixed capital investment 14.6 5.4 4.0 3.4 2.1 2.0 Exports, goods and services 14.3 10.9 1.4 -1.0 1.4 2.3 Imports, goods and services 10.3 -2.4 7.8 1.9 2.1 1.5 Real GDP growth, at constant factor prices 8.2 0.7 8.3 2.8 2.4 2.3 Agriculture 0.1 -6.2 -2.0 6.1 2.4 2.1 Industry -1.2 -2.5 4.8 1.5 2.0 2.3 Services 12.2 2.6 10.5 2.8 2.5 2.3 Employment rate (% of working-age population, 15 years+) 55.3 54.5 54.5 54.4 54.3 54.3 Inflation (consumer price index) 6.3 4.4 3.3 2.1 1.5 1.3 Current account balance (% of GDP) -8.2 -0.6 -1.5 -2.0 -1.9 -1.9 Net foreign direct investment inflow (% of GDP) 4.6 0.4 -2.3 -2.3 -2.3 -2.2 1 Fiscal balance (% of GDP) -0.1 -1.4 -1.4 -1.5 -1.5 -1.5 Revenues (% of GDP) 23.1 22.9 22.5 22.5 22.5 22.5 1 Debt (% of GDP) 70.9 71.2 62.9 62.9 62.4 61.6 1 Primary balance (% of GDP) 1.7 0.7 0.8 0.8 0.9 0.9 2,3 International poverty rate ($2.15 in 2017 PPP) 0.3 0.3 0.3 0.3 0.3 0.3 2,3 Lower middle-income poverty rate ($3.65 in 2017 PPP) 3.2 3.2 2.9 2.8 2.8 2.6 2,3 Upper middle-income poverty rate ($6.85 in 2017 PPP) 16.6 16.6 15.0 14.6 14.2 14.1 GHG emissions growth (mtCO2e) 0.3 0.3 0.2 0.1 0.1 0.1 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Fiscal balances are reported in fiscal years (April 1st -March 31st). 2/ Projection using neutral distribution (2018) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU. 3/ Calculations based on SEDLAC harmonization, using 2018-HBS. Actual data: 2018. Nowcast: 2019-2024. Forecasts are from 2025 to 2027. Macro Poverty Outlook / April 2025 9 This outlook reflects information available as of April 10, 2025. 1 2 BOLIVIA Population Poverty million millions living on less than $6.85/day 12.4 1.7 3 4 Life expectancy at birth School enrollment Macroeconomic imbalances and sociopolitical tensions con- years primary (% gross) tinue to weigh on poverty reduction and growth, projected at 1.2 percent in 2025. Declining gas revenues and Bolivia’s 64.9 98.9 5 6 large subsidies have widened fiscal and external pressures. GDP GDP per capita Annual inflation increased to 14.6 percent by March. Bolivia current US$, billion current US$ would benefit from a medium-term strategy to enhance macroeconomic stability and promote private investment. 49.7 4001.2 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2023 (2017 PPPs). 3/ 2022. 4/ 2023. 5/ 2024. 6/ 2024. Key conditions and challenges Recent developments Bolivia suffers from structurally high fiscal deficits, low Subsidies and a fixed exchange rate kept inflation low in past years, growth, dwindling reserves, and a loss of access to inter- but decreasing natural gas output is leading to forex and fuel short- national capital markets. These macroeconomic imbalances ages, a widening parallel exchange rate gap, and declining re- stem from costly subsidies, declining gas production due serves. Inflation increased to 14.6 percent year-on-year in March to insufficient investment, a narrow export base, and a 2025, with food inflation at 25.3 percent (Figure 1). The Govern- weak business environment discouraging private-sector ac- ment continues to resort to ad-hoc measures, including price con- tivity. Progress in poverty reduction has slowed as a result, trols and export restrictions. The fiscal deficit increased from 7.1 and the country now has limited buffers to respond to ex- percent of GDP in 2022 to 10.9 percent in 2023 and an estimated ternal and climate shocks. 11.6 percent in 2024, driven by the declining gas revenues and con- tinuing high subsidies. Given difficulties in obtaining legislative ap- Low job quality is a structural issue in Bolivia, hindering proval for external loans and the limited access to international economic growth and poverty reduction. The ongoing demo- capital markets, the Government increasingly resorts to monetary graphic transition, increasing urbanization, and a more edu- financing, further fueling inflation. Public debt is estimated at 93.0 cated workforce are making it more urgent to generate more percent of GDP in 2024. and better jobs. Current social assistance programs do not effectively support the poor and vulnerable, with benefits Real GDP growth was 3.1 percent in 2023, and it is estimated to not indexed to inflation, and their design limits their ability have slowed to 1.4 percent in 2024, driven by a decrease in capital to respond swiftly to shocks. formation, lower growth in government and private consumption, FIGURE 1 / Inflation FIGURE 2 / Actual and projected poverty rates and real GDP per capita Percent (y/y) Poverty rate (%) Real GDP per capita (constant LCU) 30 40 4500 25 35 4000 20 30 3500 3000 15 25 2500 10 20 2000 5 15 1500 0 10 1000 -5 5 500 -10 0 0 2018 2019 2020 2021 2022 2023 2024 2025 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate Headline Food Housing Education Upper middle-income pov. rate Real GDP pc Source: Instituto Nacional de Estadística of Bolivia (INE). Source: World Bank. Notes: See footnotes in table on the next page. 10 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. and import contraction. Real per capita household income in 2023 fiscal deficits, projected to continue above 12.0 percent of GDP. surpassed its 2021 levels, resulting in a decline in the poverty rate Given Bolivia’s limited access to external financing and its contin- from 15.2 percent in 2021 ($6.85/day per capita 2017 PPP) to 14.1 ued use of monetary financing, price pressures are high. Inflation percent in 2023. Labor force participation, employment rates, and is expected to increase to 13.0 percent in 2025 and may be further average real labor income stagnated in 2021-23. However, the in- exacerbated as dollar shortages generate import constraints. tegration of a growing working-age population into the labor mar- ket helped boost household income. Old-age pensions contributed Poverty is projected to present a slight upward trend in the medi- to the reduction in poverty, as the number of individuals eligible um term as growth slows, failing to keep pace with population for a non-contributory pension rose, while 40 percent of them re- growth. Given mounting inflationary pressures, the purchasing mained employed. Public transfers declined with the phase-out of power of poor and vulnerable households is at risk of eroding. COVID-19 relief programs. Income growth was more pronounced at the top of the distribution, increasing the Gini index from 40.9 The current account deficit is projected to remain close to -2.7 per- in 2021 to 42.1 in 2023. Per capita growth is projected to decline in cent due to lower natural gas production and export restrictions. 2024, increasing the poverty rate ($6.85/day per capita 2017 PPP) Despite recent contracts with foreign companies, the impact of mo- to 14.6 percent. bilizing foreign and public investment in lithium development and gas exploration is expected to be limited in the short and medium The country's external situation continues to weaken, putting term due to the long investment horizons. pressure on the parallel exchange rate. The current account bal- ance fell to -2.0 percent of GDP in the first three quarters of Depleted macroeconomic buffers and limited scope for reforms 2024, driven by the decrease in gas exports, while international in a fragmented political context expose the economy to both reserves stood at the low level of 1.98 billion dollars in December domestic and external risks, such as climate events and an in- 2024 (2.9 months of imports). creasingly adverse global economic context. Lower-than-previous- ly anticipated prices for oil and gas exports also pose downside risks to fiscal revenues and inflation. A credible medium-term Outlook plan to reduce the fiscal deficit, accumulate reserves, and regain access to international capital markets is critical for igniting new Growth is expected to slow further to 1.2 percent in 2025 as macro- growth and reducing poverty. Fiscal sustainability could be en- economic imbalances, fuel shortages, inflation, and uncertainty hanced by transitioning from universal fuel subsidies to more tar- limit private consumption and overall economic activity. Falling hy- geted support mechanisms, rationalizing public investment, and drocarbon revenues and high subsidy spending continue to widen making public procurement more efficient. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 3.6 3.1 1.4 1.2 1.1 1.1 Private consumption 3.4 3.2 2.0 1.7 1.6 1.6 Government consumption 3.7 2.4 1.4 0.7 0.5 0.5 Gross fixed capital investment 5.6 5.7 0.4 0.1 0.1 0.1 Exports, goods and services 15.1 -8.8 -5.0 -2.0 0.5 1.5 Imports, goods and services 8.8 -2.5 -6.0 -3.0 0.6 1.5 Real GDP growth, at constant factor prices 3.7 3.1 1.4 1.2 1.1 1.1 Agriculture 3.8 2.7 2.0 2.3 2.3 2.3 Industry 1.0 1.1 0.6 0.6 0.6 0.6 Services 5.7 4.6 1.7 1.3 1.2 1.0 Employment rate (% of working-age population, 15 years+) 75.5 76.0 76.0 76.0 76.0 76.0 Inflation (consumer price index) 1.7 2.6 5.1 13.0 13.5 13.5 Current account balance (% of GDP) 2.1 -2.6 -2.5 -2.6 -2.7 -2.6 Net foreign direct investment inflow (% of GDP) 0.2 0.1 -0.2 -0.1 -0.1 -0.1 Fiscal balance (% of GDP) -7.1 -10.9 -11.3 -12.1 -12.6 -12.8 Revenues (% of GDP) 26.6 26.6 26.0 25.6 25.5 25.5 Debt (% of GDP) 80.1 84.9 93.0 96.0 97.5 98.0 Primary balance (% of GDP) -5.5 -9.3 -9.7 -10.5 -11.0 -11.3 1,2 International poverty rate ($2.15 in 2017 PPP) 2.2 1.8 2.0 2.4 2.5 2.8 1,2 Lower middle-income poverty rate ($3.65 in 2017 PPP) 5.6 5.0 5.1 5.6 5.9 6.2 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) 15.9 14.1 14.6 15.0 15.2 15.3 GHG emissions growth (mtCO2e) 1.2 0.4 -0.2 -0.2 -0.1 -0.1 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on SEDLAC harmonization, using 2023-EH. Actual data: 2023. Nowcast: 2024. Forecasts are from 2025 to 2027. 2/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 11 This outlook reflects information available as of April 10, 2025. 1 2 BRAZIL Population Poverty million millions living on less than $6.85/day 205.3 45.8 3 4 Life expectancy at birth School enrollment GDP grew 3.4 percent in 2024, driven by consumption and years primary (% gross) investment. Growth is expected to slow to 1.8 percent in 2025 amid global headwinds and tighter monetary policy. 73.4 104.0 5 6 Medium-term growth is projected at 2.0 percent, supported GDP GDP per capita by recent reforms. Job and wage growth reduced poverty by current US$, billion current US$ 0.8 percentage points in 2024, but further reforms are need- ed to sustain growth, boost competitiveness, create jobs, 2179.4 10616.2 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2023 (2017 PPPs). 3/ 2022. and reduce inequality. 4/ 2022. 5/ 2024. 6/ 2024. minimum wage increases, is essential for compliance with fiscal Key conditions and challenges rules and targets, improving fiscal policy credibility. A proposed in- come tax reform aimed at broadening the tax base and enhancing Brazil's economic growth has shown resilience, averaging over 3 progressivity would further support fiscal sustainability. percent in the past three years. Strong private consumption, boost- ed by social transfers, was the main driver of demand, while, on the supply side, growth in services and agriculture played a key role. Recent developments The expanding labor market helped reduce poverty and inequality, although the Gini Index remained high at 51.7 percent in 2024. The In 2024, GDP grew 3.4 percent, driven by private consumption sup- recent indirect tax reform is expected to improve productivity, re- ported by a strong labor market, and investment recovery. On duce compliance costs, and remove myriad economic distortions. the supply side, services led growth while industry recovered, and To sustain growth amid demographic changes, further structural agriculture dropped from its record 2023 level. Strong services reforms are needed to enhance productivity, improve business en- demand, higher food prices, and domestic currency depreciation vironment, promote innovation and openness to trade, strengthen drove inflation to 4.8 percent in 2024, exceeding the upper limit learning outcomes, and boost resilience to climate change. of the Central Bank's target range (4.5 percent). This prompted a monetary tightening of 375 basis points since August 2024. The Fiscal sustainability remains a challenge. Budget rigidity and expen- current account deficit increased to 2.8 percent of GDP, driven by diture growth indexation undermine public spending efficiency, increased imports of goods and services, mostly financed by net eroding fiscal space for public investments. With a high and rising foreign direct investment (FDI) of 2.1 percent of GDP. Meanwhile, debt-to-GDP ratio, highly sensitive to negative economic shocks, a driven by shifts in the external environment and fiscal uncertainty, primary fiscal adjustment of 3 percent of GDP is necessary to re- the Real depreciated by 27.9 percent at year-end, despite a slight verse the debt trajectory and rebuild fiscal buffers. Controlling age- rebound in 2025. Reserves remained at 15 percent of GDP, cover- related spending, through reforms like de-indexing pensions from ing 14 months of goods imports. FIGURE 1 / Real GDP growth and contributions to real GDP growth FIGURE 2 / Actual and projected poverty rates and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 12 40 8000 9 35 7000 6 30 6000 3 25 5000 0 20 4000 -3 15 3000 -6 10 2000 -9 5 1000 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 0 0 Gov. cons. Exports GFCF 2012 2014 2016 2018 2020 2022 2024 2026 Inventories Private cons. Imports International poverty rate Lower middle-income pov. rate Statistical disc. GDP Upper middle-income pov. rate Real GDP pc Source: World Bank staff calculations. Source: World Bank. Notes: See footnotes in table on the next page. 12 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. The general government’s primary fiscal deficit narrowed from 2.3 tightening anchors inflation expectations. Medium-term growth is percent in 2023 to 0.3 percent of GDP in 2024, driven by strong rev- expected to stabilize at 2.0 percent, reflecting the impact of ongo- enue growth and reduced expenditures (in 2023 expenditures in- ing structural reforms. The current account deficit is expected to creased due to one-off payments for judicial orders). Public debt narrow, driven by lower imports amid slowing activity, remaining increased from 73.8 percent to 76.5 percent of GDP in 2024 due to covered by net FDI flows. Efforts to curb expenditure growth and higher interest payments. increase tax revenues are projected to improve the primary deficit from 0.1 percent of GDP in 2025 to a surplus of 0.3 percent of GDP The poverty rate fell from 21.7 to 20.9 percent (at the US$6.85 by 2027. Public debt is projected to reach 80.2 percent of GDP by per day, 2017 PPP rate) in 2024, thanks to a strong labor mar- 2027, driven by high interest costs in the short term, underscoring ket. The economy added 2.8 million jobs, bringing unemploy- the need for additional fiscal efforts. Thereafter, debt is projected ment to a record low of 6.2 percent by year-end and lifting to decline slowly, supported by primary surpluses, continued GDP labor force participation. Average real wages rose by 4.8 per- growth and moderating domestic interest rates. cent, above the 3.0 percent real increase in the minimum wage. The minimum wage increase benefited not just low wage work- Poverty reduction is expected to slow due to lack of fiscal space for ers, but also pensioners and social protection recipients, whose increased social spending and reduced growth in services, where benefits are largely set by it. Poverty declined the most in rural 80 percent of the poor are employed. areas, among youth, and black Brazilians (1.3, 0.8, and 0.8 per- centage points, respectively). Macroeconomic risks are tilted to the downside. Resilient con- sumption and faster implementation of structural reforms could result in higher growth. However, lower commodity prices may Outlook compound the potential effects of the ongoing trade tensions. In- creasing interest rates in the US could trigger further depreciation Growth is expected to decrease to 1.8 percent in 2025 as higher and inflation pressures. Domestic risks stem from the challenge interest rates and uncertainty in trade policy weigh on investment to achieve fiscal adjustment and anchor inflation expectations. A and exports. Household consumption is expected to slow due robust financial system, ample foreign reserves, large cash bal- to lower transfers and fading labor market gains. Inflation is ex- ances, a flexible exchange rate, and low foreign-denominated pected to gradually converge to 4.2 percent by 2027, as monetary debt continue to mitigate risks. Recent history and projections 2022 2023 2024 2025f 2026f 2027f Real GDP growth, at constant market prices 3.0 3.2 3.4 1.8 2.0 2.0 Private consumption 4.1 3.2 4.8 2.0 2.3 2.4 Government consumption 2.1 3.8 1.9 1.6 1.4 1.2 Gross fixed capital investment 1.1 -3.0 7.3 0.6 0.8 0.9 Exports, goods and services 5.7 8.9 2.9 1.5 1.1 0.9 Imports, goods and services 1.0 -1.2 14.7 1.3 1.0 1.0 Real GDP growth, at constant factor prices 3.1 3.4 3.1 1.8 2.0 2.0 Agriculture -1.1 16.3 -3.2 5.0 2.5 2.0 Industry 1.5 1.7 3.3 1.5 1.6 1.8 Services 4.1 2.5 3.8 1.5 2.1 2.1 Employment rate (% of working-age population, 15 years+) 56.6 56.9 58.0 56.7 56.0 55.7 Inflation (consumer price index) 9.3 4.6 4.4 5.4 4.7 4.2 Current account balance (% of GDP) -2.2 -1.2 -2.8 -2.3 -2.1 -2.0 Net foreign direct investment inflow (% of GDP) 2.1 1.7 2.1 2.5 2.5 2.5 Fiscal balance (% of GDP) -4.6 -8.8 -8.4 -7.6 -6.6 -5.7 Revenues (% of GDP) 39.4 37.5 38.8 38.7 38.4 38.3 Debt (% of GDP) 71.7 73.8 76.5 78.8 79.8 80.2 Primary balance (% of GDP) 1.2 -2.3 -0.3 -0.1 0.0 0.3 1,2 International poverty rate ($2.15 in 2017 PPP) 3.5 2.7 2.6 2.6 2.6 2.6 1,2 Lower middle-income poverty rate ($3.65 in 2017 PPP) 8.4 7.4 7.2 7.1 7.0 6.9 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) 23.5 21.7 20.9 20.8 20.6 20.3 GHG emissions growth (mtCO2e) 0.8 -11.7 -13.0 2.1 -2.8 -0.4 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on SEDLAC harmonization, using 2023-PNADC-E1. Actual data: 2023. Nowcast: 2024. Forecasts are from 2025 to 2027. 2/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 13 This outlook reflects information available as of April 10, 2025. 1 2 CHILE Population Poverty million millions living on less than $6.85/day 20.1 0.9 3 4 Life expectancy at birth School enrollment years primary (% gross) Growth is projected to converge towards potential in 2025. Elevated inflation is expected to persist throughout most 79.5 100.2 5 6 the year but subside by year-end. Poverty and inequality GDP GDP per capita are unlikely to decrease due to the stagnation of real current US$, billion current US$ household incomes. A larger-than-expected deficit in 2024 increased public debt. 330.2 16441.2 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2022 (2017 PPPs). 3/ 2022. 4/ 2022. 5/ 2024. 6/ 2024. non-mining sectors, low dynamism in labor-intensive industries Key conditions and challenges like construction, and rising wage costs. The poverty rate, defined as the share of people living below US$6.85/day per capita (2017 Chile has strong macroeconomic institutions and effectively PPPs), declined to 4.7 percent. Women, youth, and low-skilled managed recent global macroeconomic volatility. However, the workers remain overrepresented among the poor. Informality re- country faces mounting challenges due to low growth, subdued mained high at 26.4 percent in December 2024, down from 27.5 investment, and a decade-long productivity stagnation. Min- percent the previous year, with women disproportionately affected ing is expected to support medium-term growth. On the fiscal at 28.4 percent compared to 24.8 percent for men. front, the government is making additional efforts to achieve its medium-term fiscal balance target, as structural shifts have Inflation decreased to 4.3 percent in 2024 from 7.6 percent in led to revenue shortfalls. Poverty in Chile is the lowest in the 2023 but remained above the Central Bank’s 3.0 percent target. region and has been steadily declining. However, significant re- Inflation spiked into double digits in 2022 before declining. It rose gional disparities persist, and progress in non-monetary indica- again in March 2024 driven by currency depreciation, higher la- tors remains limited. bor costs, and three subsequent adjustments of previously frozen electricity rates. The Central Bank reduced the policy rate from 8.25 to 5.0 percent in 2024, as inflation eased and domestic de- Recent developments mand remained weak. GDP grew by 2.6 percent in 2024, driven by mining exports. In- The current account deficit decreased to 1.5 percent of GDP, driven vestment decreased by 1.4 percent, while consumption grew just by stronger export growth and lower imports amid a depreciated 1.0 percent. Unemployment declined slightly to 8.5 percent from peso. Consequently, national savings rose to 19.5 percent of GDP 8.6 percent in 2023 but remained above the 7.2 percent recorded in the second quarter, up from 18.7 percent last year, fueled by in 2019. Sluggish job creation is attributed to low investment in higher private savings. FIGURE 1 / Fiscal trends: Debt, revenue, and expenditures FIGURE 2 / Actual and projected poverty rates and real GDP per capita Percent of GDP Poverty rate (%) Real GDP per capita (constant million LCU) 45 30 12 40 25 10 35 30 20 8 25 15 6 20 15 10 4 10 5 2 5 0 0 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 International poverty rate Lower middle-income pov. rate Gross debt Expenditures Revenues Upper middle-income pov. rate Real GDP pc Sources: Central Bank of Chile and World Bank staff calculations. Source: World Bank. Notes: See footnotes in table on the next page. 14 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. Consumer and commercial loans experienced negative real annual stronger sales, though cautious investment decisions persist due growth of 2 and 3 percent, respectively, in 2024. Commercial loans, to uncertainty. Poverty and income inequality are estimated to re- which increased in 2020, have since declined by 10 percent (3 per- main around 4.6 percent and 43.0 Gini points in 2025, respectively, cent since 2019). While interest rates have reflected monetary pol- and gradually decrease thereafter. icy cuts, stricter collateral requirements have limited lending, and demand has remained subdued. Short-term cost pressures are expected to keep inflation around 5 percent in early 2025, but medium-term inflationary pressures The Central Government cyclically adjusted fiscal deficit reached should ease, with the monetary policy rate declining over the 3.2 percent of GDP in 2024, exceeding the 1.9 percent target policy horizon. and raising the debt-to-GDP ratio to 42 percent. Weak corporate tax collection, slow domestic demand recovery, and a drop in The current account is expected to deteriorate to 3.6 percent of lithium prices contributed to lower-than-expected revenue. To GDP as lower copper prices and rising import costs will also weigh mitigate the gap, the government implemented cuts totaling 0.6 on the balance. percent of GDP. The latest Public Finance Report (Q4 2024) predicts that the Central In January 2025, Congress approved a pension reform with a 7 Government’s cyclically adjusted deficit will reach 1.6 percent of percent employer contribution and raised the state-backed pen- GDP in 2025, exceeding the 1.1 percent target due to lower tax col- sion, increasing fiscal expenditures by 0.3 percent of GDP by lection and lithium revenues. Efforts to reduce the deficit are ex- 2027. The reform is expected to boost savings by 1.7 percent of pected but not yet reflected in the projections. The 2026 target is a GDP, supporting investment and growth, though it may discourage 0.5 percent deficit, but the government estimates, based on com- formal employment. mitted expenditures and projected cyclically adjusted revenue, it will reach 1.2 percent. The debt-to-GDP ratio is projected to remain around 42.7 percent by 2027, slightly below the 45 percent target. Outlook Current global trade tensions will likely mostly affect Chile indi- Real GDP growth is expected to be 2.1 percent in 2025, driven by rectly given its relatively low exposure to the US market. Chang- a recovery in investment and continued export growth, although ing trade policies and heightened uncertainty could have signif- uncertainty around global trade dynamics could weigh on invest- icant indirect effects on Chile through lower demand for its ex- ment decisions and dampen growth prospects. The investment ports and lower copper prices. Additional external risks include rebound is primarily attributed to reactivated large-scale mining tighter credit conditions, which could hinder investment recovery. projects, positively impacting medium-term investment. Outside Domestic risks arise from political uncertainty ahead of the No- mining, business confidence improved at the end of 2024 due to vember 2025 elections. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 2.2 0.5 2.6 2.1 2.2 2.1 Private consumption 1.6 -4.9 1.0 2.1 2.2 2.2 Government consumption 6.3 2.2 3.0 1.4 1.9 2.0 Gross fixed capital investment 4.6 -0.1 -1.4 3.7 2.8 2.4 Exports, goods and services 0.8 0.1 6.6 3.1 2.8 2.8 Imports, goods and services 1.3 -10.9 2.5 3.9 3.1 3.1 Real GDP growth, at constant factor prices 2.5 1.4 2.9 2.1 2.2 2.1 Agriculture -0.1 -0.8 5.4 2.3 2.2 2.2 Industry -1.4 2.9 3.3 1.6 1.8 1.8 Services 4.3 0.9 2.6 2.3 2.3 2.2 Employment rate (% of working-age population, 15 years+) 55.0 55.8 56.7 56.7 56.6 56.6 Inflation (consumer price index) 11.6 7.6 4.3 4.6 3.2 3.0 Current account balance (% of GDP) -7.9 -3.1 -1.5 -3.6 -3.9 -3.6 Net foreign direct investment inflow (% of GDP) 1.7 4.6 2.7 2.5 2.5 2.4 Fiscal balance (% of GDP) 1.4 -2.3 -2.5 -3.2 -2.8 -2.6 Revenues (% of GDP) 27.9 25.0 24.0 24.3 24.6 24.5 Debt (% of GDP) 37.7 39.2 41.6 42.4 42.7 42.7 Primary balance (% of GDP) 2.4 -1.2 -1.5 -2.1 -1.7 -1.5 1,2 International poverty rate ($2.15 in 2017 PPP) 0.4 0.5 0.4 0.4 0.4 0.4 1,2 Lower middle-income poverty rate ($3.65 in 2017 PPP) 0.9 0.9 0.8 0.8 0.8 0.8 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) 4.7 4.9 4.7 4.6 4.5 4.5 GHG emissions growth (mtCO2e) -14.7 -3.6 5.5 4.4 4.7 4.0 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on SEDLAC harmonization, using 2022-CASEN. Actual data: 2022. Nowcast: 2023-2024. Forecasts are from 2025 to 2027. 2/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 15 This outlook reflects information available as of April 10, 2025. 1 2 COLOMBIA Population Poverty million millions living on less than $6.85/day 52.9 16.9 3 4 Life expectancy at birth School enrollment Growth reached 1.7 percent in 2024, driven by private con- years primary (% gross) sumption and modest investment, as inflation eased and in- terest rates fell. While external deficits normalized, the fiscal 73.7 104.8 5 6 deficit widened, debt increased due to weak revenue and GDP GDP per capita rigid spending. Poverty is estimated to have declined slightly current US$, billion current US$ to 31.3 percent, with regional disparities persisting. Growth is projected at 2.4 percent in 2025. Risks include slow fiscal 418.0 7903.8 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2023 (2017 PPPs). 3/ 2022. consolidation, inflation persistence, and global uncertainty. 4/ 2022. 5/ 2024. 6/ 2024. preventable infant mortality. Higher productivity growth requires Key conditions and challenges improved infrastructure, public services, a more equitable tax system, and more open business environment. Inclusive growth Colombia has maintained macroeconomic stability through further requires more efficient fiscal transfers, modernized social strong institutions, including inflation-targeting, exchange rate security, and improved labor markets. flexibility, and fiscal rules. However, growth has remained insuffi- cient, with productivity stagnating for over two decades, limiting convergence with high-income economies and progress in reduc- Recent developments ing social inequalities. Colombia's economy grew 1.7 percent in 2024 (0.7 percent per Despite a strategic location and multiple trade agree- capita), supported by declining inflation and looser monetary ments, limited global integration constrains export diver- policy. Private consumption remained resilient, with modest in- sification beyond commodities. A complex and unequal vestment gains in civil works. Activity in the health, education, tax system discourages private investment, limited market public administration, agriculture, and entertainment sectors led competition stifles innovation and productivity growth, growth. But momentum slowed in the second half of 2024 due while rigid public spending limits growth-enhancing invest- to fiscal consolidation. ments. Service delivery remains weak with subpar educa- tion outcomes, and infrastructure deficits reduce connectivity Inflation fell from 11.7 percent in 2023 to 6.6 percent in 2024 re- and competitiveness. maining above the central bank’s 2-4 percent target, with core in- flation persisting due to indexation. The central bank cautiously cut Structural constraints perpetuate deep regional inequalities, with the policy rate to 9.5 percent, constrained by fiscal risks and exter- Bogotá’s income nearly six times that of Chocó. Some munici- nal uncertainties. The peso depreciated 5.8 percent due to dollar palities experience up to 90 percent of “learning poverty” and strength and fiscal uncertainty. FIGURE 1 / GDP and components FIGURE 2 / Actual and projected poverty rates and real GDP per capita Index 2019=100 Poverty rate (%) Real GDP per capita (constant million LCU) 140 60 25 130 120 50 20 110 40 100 15 90 30 80 10 70 20 60 5 10 50 2018Q1 2019Q1 2020Q1 2021Q1 2022Q1 2023Q1 2024Q1 0 0 GDP Consumption 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Gross fixed capital formation Exports International poverty rate Lower middle-income pov. rate Imports Upper middle-income pov. rate Real GDP pc Sources: Departamento Administrativo Nacional de Estadísticas (DANE), and World Source: World Bank. Notes: See footnotes in table on the next page. Bank staff calculations. 16 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. The fiscal deficit widened from 2.7 percent in 2023 to 4.8 percent of Inflation is expected to gradually converge to 3.0 percent in 2026, GDP in 2024 due to weak corporate tax receipts from extractives, allowing gradual interest rate reductions. underperforming VAT, and high public spending. Despite expendi- ture cuts of 1.7 percent of GDP, under-execution was necessary The fiscal deficit is expected to narrow to 4.5 percent of GDP in 2025, to approach fiscal targets. Debt-to-GDP rose from 59.9 percent with gradual reductions under the fiscal rule. Given inflexible expen- to 64.1 percent, driven by higher deficits, peso depreciation, in- ditures, the government announced 0.7 percent of GDP in expendi- creased interest payments, and arrears accumulation. The Emerg- ture deferrals for 2025, primarily affecting investment. Meeting fiscal ing Markets Bond Index Global spreads increased from 300 to 322 targets will require strict spending controls to offset potential rev- bps, above peers but below the November 2022 peak. The current enue shortfalls, a lower tax base, uncertain tax administration account deficit narrowed from 2.4 to 1.8 percent of GDP, support- gains and rising debt servicing costs. Tight cash management will ed by strong services exports and reduced primary income out- be essential to preserve liquidity. Debt would stabilize after 2027. flows. Total exports held at $49.6 billion, with volume gains in coal The current account deficit is projected to widen to 3.3 percent in and coffee offset by lower prices. Record-high remittances (2.8 per- 2025, driven by falling commodity exports receipts and rising im- cent of GDP) helped ease external pressures. Foreign direct invest- port costs. It is expected to stabilize at 2.7 percent by 2027. FDI (3.0 ment (FDI) remained strong in extractives, while international re- percent of GDP) should remain the main external financing source. serves reached $63 billion, covering nine months of imports. Poverty reduction should advance slightly with economic recovery, Labor markets improved slightly, with employment increasing by declining to 30.8 percent in 2025, though climate shocks may affect 756,000 people, benefiting mainly large cities and women. Howev- households, particularly in Caribe and Pacífico. Promoting better- er, 86 percent of new jobs were in lower-productivity self-employ- quality jobs and adjusting social protection—such as expanding ment, and informality slightly increased, particularly in Bogotá. The coverage and adaptiveness—would enhance resilience. impact of social assistance restructuring remains unclear due to changes in targeting, benefits, and budget cuts. The poverty rate is Downside risks are significant, with uncertainty around fiscal con- expected to have slightly declined to 31.3 percent in 2024 (Upper solidation. A larger-than-expected deficit or delays in structural fis- Middle-Income Country poverty line: $6.85/day, 2017 PPPs), but re- cal adjustments could raise borrowing costs and slow monetary gional disparities persist. easing. Persistent inflation and policy uncertainty may suppress private investment and job creation. External risks include volatile commodity prices and escalating trade uncertainty that could trig- Outlook ger adverse terms-of-trade shocks. These, combined with tighter global financial conditions, could constrain growth, amplify infla- Colombia’s economy is projected to grow 2.4 percent in 2025, tionary pressures, and exacerbate fiscal vulnerabilities, with poten- reaching its potential growth rate of 2.9 percent by 2027. Growth tial implications for poverty reduction. Climate change remains a is expected to be driven by private consumption and mildly rising threat to economic and fiscal stability, while regional armed vio- private investment, with commerce and manufacturing stabilizing. lence may worsen territorial disparities and hinder progress. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 7.3 0.7 1.7 2.4 2.7 2.9 Private consumption 10.7 0.4 1.6 2.1 2.3 2.8 Government consumption 0.8 1.6 -0.5 -0.2 0.0 0.0 Gross fixed capital investment 11.4 -12.7 3.0 0.4 5.3 4.3 Exports, goods and services 12.5 3.1 2.0 3.2 4.8 5.3 Imports, goods and services 24.0 -9.9 4.2 2.1 2.5 3.0 Real GDP growth, at constant factor prices 6.4 1.2 1.9 2.4 2.7 2.9 Agriculture -0.8 1.7 8.1 2.9 3.0 2.8 Industry 6.9 -1.3 -1.3 1.6 3.0 3.1 Services 6.9 2.1 2.4 2.6 2.5 2.8 Employment rate (% of working-age population, 15 years+) 56.5 57.3 57.3 57.6 57.8 58.0 Inflation (consumer price index) 10.2 11.7 6.6 4.5 3.1 3.0 Current account balance (% of GDP) -6.0 -2.4 -1.8 -3.3 -2.8 -2.7 Fiscal balance (% of GDP) -6.5 -2.7 -4.8 -4.5 -4.4 -4.0 Revenues (% of GDP) 27.6 32.4 28.9 28.2 27.8 27.9 Debt (% of GDP) 64.6 59.9 64.1 64.7 65.9 67.0 Primary balance (% of GDP) -2.1 1.3 -0.2 0.3 0.3 0.5 1,2 International poverty rate ($2.15 in 2017 PPP) 6.0 4.8 4.8 4.5 4.5 4.4 1,2 Lower middle-income poverty rate ($3.65 in 2017 PPP) 14.0 12.2 12.0 11.5 11.4 11.2 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) 34.8 32.4 31.3 30.8 30.5 30.1 GHG emissions growth (mtCO2e) -0.9 -3.0 -1.8 -0.4 -0.1 -0.1 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on SEDLAC harmonization, using 2023-GEIH. Actual data: 2023. Nowcast: 2024. Forecasts are from 2025 to 2027. 2/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 17 This outlook reflects information available as of April 10, 2025. 1 2 COSTA RICA Population Poverty million millions living on less than $6.85/day 5.1 0.5 3 4 Life expectancy at birth School enrollment Growth reached 4.3 percent in 2024, driven by strong years primary (% gross) domestic demand, with construction and manufacturing standing out. Policy rate cuts helped return inflation to the 77.3 107.6 5 6 positive territory. Despite a higher fiscal deficit, fiscal consoli- GDP GDP per capita dation remains on track and the public debt continues to current US$, billion current US$ decline. Strong labor market outcomes, including the lowest unemployment rate in a decade, supported reductions in 96.1 18736.5 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2024 (2017 PPPs). 3/ 2022. poverty and, to a lesser extent, in inequality. 4/ 2022. 5/ 2024. 6/ 2024. Fiscal challenges arose between 2008 and 2018 due to increased Key conditions and challenges spending without corresponding revenues. A 2018 reform aimed to stabilize the fiscal situation, but the pandemic and commodity Costa Rica's per capita income has doubled in the past price shocks delayed adjustments. Public debt rose from 56 per- two decades, thanks to an outward-oriented growth mod- cent of GDP in 2019 to 68 percent of GDP in 2021. Increased rev- el, investments in human capital, and good governance. enues, expenditure controls, and strong growth (averaging 5.9 per- The country diversified its exports, reducing its vulnerabil- cent between 2021 to 2023) enabled the country to post primary ity to external shocks, and strengthened its green trade- surpluses since 2022. The public-debt-ratio is declining but remains mark through sustainable natural resource management at around 60 percent of GDP. and reforestation. Addressing inclusion and fiscal management challenges is crucial. However, weak integration between the export-oriented and Growth must benefit all socioeconomic groups. Fiscal policies domestic-oriented segments of the economy has contributed should continue to support sustainability, while protecting vulner- to income and territorial disparities. Despite accessible health- able groups. Revenue mobilization and spending efficiency are es- care and education, monetary poverty reduction has been sential to address these challenges. limited (from 15.6 percent in 2010 to 14.1 percent in 2022, US$6.85/day, 2017 PPP) but has accelerated since 2022 (to 10 percent in 2024). Inequality remains high (Gini index of Recent developments 45.8 in 2024). All five regions have poverty rates twice that of the Central region, which includes San Jose. Poverty is Costa Rica's economy grew 4.3 in 2024, driven by strong domestic higher among Afrodescendants, indigenous populations, and demand, particularly private consumption and investment. Key migrants. Female labor force participation remains low at contributors included construction, manufacturing, and transport, 49.3 percent in 2023. while adverse weather impacted agriculture and tourism. FIGURE 1 / Revenues, expenditures, and deficit FIGURE 2 / Actual and projected poverty rates and real GDP per capita Percent of GDP Percent of GDP Poverty rate (%) Real GDP per capita (constant million LCU) 25 1 25 10 0 9 20 -1 20 8 -2 7 15 -3 15 6 -4 5 10 -5 10 4 -6 3 5 -7 5 2 1 -8 0 0 0 -9 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 International poverty rate Lower middle-income pov. rate Budget deficit Revenues Expenditures Upper middle-income pov. rate Real GDP pc Sources: Ministry of Finance of Costa Rica and World Bank estimates. Source: World Bank. Notes: See footnotes in table on the next page. 18 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. After experiencing deflation, fueled by exchange rate appreciation in key trade partners. Robust domestic demand and FDI, particu- and falling commodity prices, the BCCR cut rates by 425 basis larly in manufacturing and services, will help support growth dur- points between March-2023 and October-2024. This monetary eas- ing 2025-2026. Exports are expected to gradually recover starting ing raised inflation to 0.8 percent by the end of 2024. With low in- in late 2026 as the global economy gains momentum. flation and a resilient labor market, the poverty rate (US$6.85/day, 2017 PPP) fell by 2.7 p.p. in 2024. The CAD is expected to widen to 1.8 percent of GDP, amid lower ex- ports growth and increased capital goods imports. FDI is expected The current account deficit (CAD) stayed stable at 1.4 percent of to decelerate mildly due to uncertainty but stay strong. Reserves GDP in 2024, financed by strong foreign direct investment (FDI). remain at adequate levels. Merchandise exports grew steadily, supported by medical sup- plies and manufacturing, while services exports slowed. Goods Inflation is projected to return to the target range (3 percent ± imports decelerated, but service imports expanded due to higher 1p.p.) in 2025, supported by a neutral monetary stance. The pover- outbound travel. Net international reserves reached US$ 14.2 bil- ty rate is projected to decline below 10 percent for 2025-2027. Im- lion, covering 5.7 months of imports. The exchange rate appreci- proving targeting and efficiency in social programs could further ated 2.9 percent against the US dollar in 2024, adding to the 18 reduce poverty and vulnerability. percent appreciation since 2022. The government’s commitment to debt sustainability and the Fiscal consolidation continued with a smaller primary surplus (1.1 fiscal rule will guide fiscal consolidation, aided by contained percent of GDP). Expenditures grew faster than revenues, influenced non-priority spending and ongoing tax administration efforts. by temporary factors such as retroactive wage adjustments and de- Fiscal projections for 2025-2026 forecast a higher primary layed payments of accrued revenues. Investments in transport infra- surplus and a reduced fiscal deficit, focusing on wage bill structure and emergency programs raised capital expenditures. efforts, a declining interest bill, but sustained capital expen- Combined with higher interest payments, this led to a fiscal deficit of ditures. Debt is expected to continue decreasing as gross 3.8 percent of GDP. Costa Rica remained aligned with its medium- financing needs decline. term fiscal goals, reducing financing needs and the debt-to-GDP ratio. Fiscal consolidation has boosted confidence, leading to upgrades in Downside risks to the outlook include uncertainties about sovereign credit ratings by all three major rating agencies. global trade policy, geopolitical tensions that could disrupt supply chains and raise prices, and tighter global financing conditions. Domestically, reduced revenues or unexpected Outlook spending could slower fiscal consolidation, while extreme weather could affect agriculture and tourism. Conversely, the Economic growth is projected to average 3.7 percent for approval of tax reforms by the National Assembly could accel- 2025-2027, reflecting a slowdown in exports due to weaker growth erate fiscal consolidation. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 4.6 5.1 4.3 3.5 3.7 3.8 Private consumption 2.6 5.0 4.9 4.0 4.0 4.1 Government consumption 2.4 0.1 0.9 0.7 1.4 0.9 Gross fixed capital investment 1.5 8.6 4.3 3.9 4.2 3.9 Exports, goods and services 18.5 10.0 5.8 5.1 5.7 6.1 Imports, goods and services 8.1 5.2 6.1 5.7 5.8 6.1 Real GDP growth, at constant factor prices 4.6 5.1 4.3 3.5 3.7 3.8 Agriculture -2.3 3.5 2.0 1.8 1.8 1.9 Industry 2.1 8.3 4.1 3.9 3.8 4.1 Services 5.8 4.3 4.4 3.5 3.8 3.9 Employment rate (% of working-age population, 15 years+) 53.3 54.5 57.5 57.9 58.4 58.8 Inflation (consumer price index) 8.3 0.6 -0.4 2.5 3.0 3.0 Current account balance (% of GDP) -3.3 -1.4 -1.4 -1.8 -1.6 -1.7 Net foreign direct investment inflow (% of GDP) 4.4 4.3 4.5 4.2 4.3 4.3 Fiscal balance (% of GDP) -2.5 -3.3 -3.8 -3.2 -3.4 -3.1 Revenues (% of GDP) 16.4 15.3 15.0 15.1 15.2 15.2 Debt (% of GDP) 63.0 61.1 59.9 59.7 59.4 59.2 Primary balance (% of GDP) 2.1 1.6 1.1 1.3 1.2 1.3 1,2 International poverty rate ($2.15 in 2017 PPP) 0.9 0.9 0.8 0.8 0.7 0.7 1,2 Lower middle-income poverty rate ($3.65 in 2017 PPP) 3.3 3.0 2.4 2.3 2.2 2.1 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) 14.1 12.7 10.0 9.6 9.3 9.0 GHG emissions growth (mtCO2e) 6.0 0.3 4.9 3.1 3.7 3.5 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on SEDLAC harmonization, using 2024-ENAHO. Actual data: 2024. Forecasts are from 2025 to 2027. 2/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 19 This outlook reflects information available as of April 10, 2025. 1 DOMINICA Population Poverty million 0.1 .. 2 3 Life expectancy at birth School enrollment Infrastructure spending, bolstered by CBI revenues, and a years primary (% gross) recovery in tourism contributed to a 4.6 percent growth in 2024. The completion of infrastructure projects, coupled 73.0 89.9 4 5 with spending containment and revenue mobilization efforts, GDP GDP per capita has resulted in lower fiscal deficits and declining public debt. current US$, billion current US$ However, new fiscal and structural reforms are necessary to sustain process. Worsening external conditions and climatic 0.7 10537.7 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2022. 3/ 2023. 4/ 2024. 5/ 2024. events pose significant risks to growth and debt sustainability. of GDP by 2026 to reduce public debt below 60 percent of GDP by Key conditions and challenges 2035. Since then, fiscal imbalances have been gradually decreasing as recurrent expenditures return to pre-pandemic levels and rev- As a small island developing state, Dominica faces economic enue-boosting measures, such as increasing excise taxes on select challenges, including high dependency on tourism and agricul- goods and introducing a stamp duty, are implemented. Further ef- ture and large public debt, which are exacerbated by climate forts are needed to ensure compliance with the FRL. shocks. In the past two decades, the country faced Hurricane Er- ica in 2015, causing US$480 million in damages, and Hurricane Dominica’s vulnerability to hurricanes and other weather events Maria in 2017, resulting in US$1.3 billion in damages and losses. further increases the risk, necessitating a focus on resilience The post-disaster and post-pandemic economic recovery has through higher fiscal buffers, climate-resilient investments, ex- been supported by infrastructure investments and a rebound in panded public and private insurance coverage, and enhanced tourism. However, potential growth has declined due to reduced social assistance. total factor productivity and lower labor contributions, linked to skilled labor emigration. With a pegged exchange rate regime, Dominica lacks effective monetary policy tools, making structural Recent developments reforms essential for efficient financial intermediation and higher economic growth. Growth is estimated at 4.6 percent in 2024, driven by im- provements in tourism and robust public investment. Tourist ar- Pandemic-related support, increased infrastructure spending, and rivals have surpassed pre-pandemic levels, with cruise visitors fiscal measures to mitigate inflation’s impact on the poorest led in 2023-24 up 62 percent from 2019-20. Ongoing public capital to high fiscal deficits and pushed public debt over 100 percent of projects have boosted the construction sector. Agricultural ini- GDP from 2020 onwards. A Fiscal Responsibility Law (FRL), intro- tiatives, such as the Emergency Agricultural Livelihoods and Cli- duced in 2021, mandates a minimum primary surplus of 2 percent mate Resilience Project and the Caribbean Agriculture Productivity FIGURE 1 / Real GDP growth and sectoral contributions to real FIGURE 2 / Public debt GDP growth Percent, percentage points Percent of GDP 12 140 8 120 4 100 0 80 -4 -8 60 -12 40 -16 20 -20 2017 2018 2019 2020 2021 2022 2023 2024e 2025f 2026f 2027f 0 2017 2018 2019 2020 2021 2022 2023 2024e 2025f 2026f 2027f Agriculture Industry Services Net Taxes Real GDP growth Public debt External public debt Sources: Eastern Caribbean Central Bank (ECCB), Government of Dominica, and World Source: Eastern Caribbean Central Bank (ECCB), Government of Dominica, and World Bank staff calculations. Bank staff calculations. 20 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. Improvement Activity, are estimated to have boosted agriculture’s is adequately capitalized in aggregate, but its exposure to shocks, contribution to growth in 2024. weak asset quality, and heavy reliance on credit unions (CUs), whose non-performing loans were at 13.4 percent in 2023, pose The government undertook an ambitious public investment pro- risks to its stability. In September 2024, non-performing loans of gram, primarily financed by citizenship by investment (CBI) rev- commercial banks stood at 11 percent, exceeding the Eastern enues, including a new international airport, geothermal projects, Caribbean Central Bank's (ECCB) 5 percent prudential benchmark. and a large housing program. While CBI revenues are strong, their volatility poses financing risk. Outlook Inflation averaged 1.5 percent in 2024H1, supported by lower en- ergy costs. Despite this, food insecurity remains a concern. In 2024, GDP is expected to grow at 4.3 percent in 2025 and remain re- 21 percent of respondents to the Food Security and Livelihoods silient, supported by ongoing public investment projects. Inflation Survey reported going a whole day without eating in the previous is forecast to decline to 2.2 in 2025, as global commodity price pres- month, and 42 percent were hungry but did not eat, up from 11 sures ease, then remain at around 2.1 percent. percent and 18 percent in 2021. Food insecurity is higher in rural areas and among people under 25, reflecting households’ income Solid growth prospects and lower inflation should help reduce instability. Additionally, around 34 percent of respondents report- poverty in the medium term. However, updated data on poverty ed experiencing job loss or income reduction in the past year. and other key indicators, such as labor market statistics, are ur- gently needed to monitor households’ wellbeing and guide policy. The fiscal position improved to an estimated deficit of 4.8 percent in FY23/24 down from 7.5 percent in FY22/23 and to 3.1 percent in The fiscal deficit is projected to narrow to 2.1 percent of GDP in FY24/25. Expenditures declined to 60.4 percent of GDP in FY24/25, 2027, driven by increased excise taxes, solid yet declining CBI in- due to reduced capital spending and the unwinding of fuel subsi- flows, stable economic performance, and the completion of infra- dies and pandemic-related support. Public debt declined to 103.2 structure projects. The CAD, financed by CBI and FDI inflows, is ex- percent of GDP in FY23/24 and 102.6 percent in FY24/25. CBI rev- pected to contract over the forecast horizon, reaching 18 percent enues remained strong at 33 percent of GDP in 2023 and estimat- of GDP in 2027 due to lower imports and higher exports as tourism ed at 30 percent in 2024. benefits from the new international airport. The current account deficit (CAD) improved to an estimated The economic outlook faces considerable downside risks from 32.9 percent of GDP in 2024 driven by increased tourism rev- volatile food and fuel prices, trade disruptions, and volatile CBI enues and lower capital goods imports. This deficit was primarily revenues. Additional risks include natural disasters, tighter global financed by CBI inflows and, to a lesser extent, recovering foreign financial conditions, fiscal vulnerabilities, and public debt sustain- direct investment (FDI). In 2024, imputed reserves were adequate ability concerns. The financial sector is vulnerable to risks from covering approximately 4.3 months of imports. The financial sector the credit unions. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 5.6 4.7 4.6 4.3 3.4 2.8 Real GDP growth, at constant factor prices 6.7 4.4 4.6 4.3 3.4 2.8 Agriculture -0.7 -2.0 2.0 2.2 2.5 2.7 Industry 0.6 5.0 4.5 3.3 2.5 2.1 Services 9.4 5.3 5.0 4.8 3.7 3.0 Inflation (consumer price index) 7.8 4.2 2.3 2.2 2.1 2.1 Current account balance (% of GDP) -27.0 -34.2 -32.9 -30.6 -23.9 -18.0 1 Fiscal balance (% of GDP) -7.5 -4.8 -3.1 -2.6 -2.4 -2.1 Revenues (% of GDP) 65.2 61.1 57.3 50.9 42.2 40.7 1 Debt (% of GDP) 108.3 103.2 102.6 99.0 95.9 93.2 1 Primary balance (% of GDP) -4.5 -2.1 0.0 0.4 0.4 0.6 GHG emissions growth (mtCO2e) 4.3 4.0 4.1 3.9 3.1 2.6 Source: ECCB, Government of Dominica and World Bank staff calculations. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Fiscal balances are reported in fiscal years (July 1st -June 30th). Macro Poverty Outlook / April 2025 21 This outlook reflects information available as of April 10, 2025. DOMINICAN 1 2 Population Poverty million millions living on less than $6.85/day 10.9 2.0 REPUBLIC Life expectancy at birth years 3 School enrollment primary (% gross) 4 The Dominican economy grew by 5 percent in 2024, driven 74.2 94.7 5 6 by monetary easing and public investment. Increased remit- GDP GDP per capita current US$, billion current US$ tances and improved labor market conditions supported poverty reduction. Nevertheless, structural challenges 123.7 11305.9 persist, including low revenue mobilization and inequality. Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2023 (2017 PPPs). 3/ 2022. Growth is expected to moderate in the medium term due to 4/ 2023. 5/ 2024. 6/ 2024. uncertainty around reform implementation, reduced fiscal stimulus, and weaker external demand. (FRL) caps primary expenditure growth at 7 percent starting in 2025 Key conditions and challenges and aims to reduce debt to 40 percent by 2035. To create more fiscal space, the country would need to improve tax collection and The Dominican Republic (DR) stands out in the Latin America spending efficiency. Re-elected in May 2024, President Abinader, and Caribbean (LAC) region for its rapid growth and significant backed by a bicameral majority, could advance long-awaited re- social progress over the last two decades. Between 2005 and forms like the energy pact and pension overhaul. However, despite 2023, GDP grew an average of 5.2 percent, poverty incidence congressional backing, the recently proposed tax reform faced so- more than halved, from 48 to 18 percent (US$6.85 per day, 2017 cial resistance and was ultimately withdrawn, casting uncertainty PPPs), and income inequality declined. Nonetheless, important over future reforms. disparities in living conditions and access to services between urban and rural areas persist. Sound monetary and fiscal poli- Increasing productivity is also essential, including by: (i) improving cies maintained macroeconomic stability and supported labor education; (ii) boosting competitiveness; (iii) revamping the innova- market dynamism. tion strategy; and (iv) improving service delivery. These should go hand in hand with improvements in social protection systems. However, DR faces fiscal pressures. Recent shocks, including the pandemic, surging commodity prices, and floods, have strained the country’s finances. Debt remains above pre-pandemic levels, with Recent developments revenue mobilization at 16.3 percent of GDP and rising spending demands. In 2024, energy sector losses required transfers of 1.2 GDP expanded 5 percent in 2024. Service sectors, like hospitality percent of GDP, while interest payments consumed 3.4 percent of and financial services, maintained momentum, expanding 9.6 and GDP, limiting public investment. The new fiscal responsibility law 8.3 percent, respectively, offsetting the 5.2 percent contraction in FIGURE 1 / Energy losses in distribution (share of total purchased) FIGURE 2 / Actual and projected poverty rates and real GDP per capita Percent Poverty rate (%) Real GDP per capita (constant LCU) 40 50 600000 35 45 500000 40 30 35 400000 25 30 25 300000 20 20 200000 15 15 10 100000 10 5 5 0 0 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 0 International poverty rate Lower middle-income pov. rate 2009 2011 2013 2015 2017 2019 2021 2023 Upper middle-income pov. rate Real GDP pc Source: World Bank staff calculations based on Ministry of Energy data. Source: World Bank. Notes: See footnotes in table on the next page. 22 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. mining. Manufacturing expanded by 4.3 percent, while construc- a 11.1 percent uptick in wages linked to health and defense reforms. tion grew 2.1 percent despite elevated input costs. The Consolidated Public Sector debt stood at 57.5 percent of GDP. The current account deficit narrowed to 3.4 percent of GDP in 2024, driven by a 5.9 percent rise in remittances (8.7 percent of GDP), and a Outlook 7 percent increase in exports, outpacing import growth. Foreign di- rect investments (FDI) remained stable at 3.6 percent of GDP, but Economic growth is anticipated to slow to 4 percent in 2025, re- net capital inflows fell by 2.5 p.p. as residents accumulated foreign flecting a weaker global economy and the fading impact of fiscal assets. Consequently, international reserves fell by US$2.1 billion stimulus of 2024. Over the medium term, growth will be driven to 10.8 of GDP (4.5 months of imports), and the peso depreciated by strong consumption and investment, supported by structural by 5 percent. reforms in energy, water, and labor, along with efforts to improve education and attract FDI. Growth is forecasted at 4.5 percent in Inflation declined to 3.3 percent y-o-y in 2024, within the central 2027. A robust labor market and stable inflation are expected to target range (4 percent +/- 1 percent). The Central Bank resumed support poverty reduction in 2025 and in 2026, reaching 15.4 and monetary easing in August 2024, lowering the policy rate from 7 15.0 percent, respectively. to 5.75 percent by December. Complementary measures includ- ed RD$140 billion in redeemed securities and RD$35.35 billion in Fiscal consolidation is expected to continue, anchored on the im- loans, contributing to a drop in lending rates, and a 10.6 percent plementation of the FRL, the phase-out of untargeted subsidies, growth in private credit. and measures to improve spending efficiency (e.g., procurement reforms, and the consolidation of institutions). Consequently, the In 2024, official poverty incidence fell 4 percentage points compared public debt-to-GDP ratio is expected to decrease progressively. to 2023, supported by rising real labor incomes. Urban poverty Comprehensive revenue and spending reforms can speed up fiscal dropped 4.4 p.p., while rural declined 1.8 p.p. Formal employment consolidation and address growing social demands. grew by 170,000, mainly in transport, communications, and services. Labor participation reached 65.3 percent in 2024, peaking at 70 The macroeconomic outlook faces downside risks, and it is ex- percent in the East and nearing 61 percent in the South. tremely uncertain. First, greater than expected shifts in global trade policies could hinder trade, remittances and growth. The fiscal deficit declined to 3.1 percent of GDP in 2024. Rev- Second, weather-related events, could disrupt agriculture and enues grew by 13.1 percent, bolstered by a large advance from tourism, disproportionately impacting the poor. Third, despite the AERODOM contract. Meanwhile, spending rose by 11.4 per- fiscal support to electricity distribution companies, persistent in- cent, fueled by a 17.2 increase in interest payments, a 12.4 rise in efficiencies have led to more frequent blackouts, which could goods and services—mainly education-related expenditures—and undermine economic growth. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 5.2 2.2 5.0 4.0 4.2 4.4 Private consumption 5.5 2.7 4.9 4.2 4.3 4.5 Government consumption 8.5 2.4 4.0 -0.1 0.7 1.8 Gross fixed capital investment 5.1 2.0 3.7 3.3 3.1 2.9 Exports, goods and services 13.1 -1.6 6.8 3.2 4.0 4.5 Imports, goods and services 14.0 0.1 2.3 1.7 2.1 2.3 Real GDP growth, at constant factor prices 4.7 2.1 5.0 4.0 4.2 4.4 Agriculture 3.4 3.6 4.9 4.4 4.2 4.2 Industry 1.6 -0.8 3.8 3.2 3.4 3.6 Services 6.2 3.2 5.5 4.3 4.4 4.7 Employment rate (% of working-age population, 15 years+) 60.6 61.7 62.3 61.5 62.6 63.4 Inflation (consumer price index) 8.8 4.8 3.3 3.3 3.5 4.0 Current account balance (% of GDP) -5.8 -3.6 -3.4 -3.6 -3.4 -3.2 Net foreign direct investment inflow (% of GDP) 3.6 3.6 3.6 3.4 3.5 3.6 1 Fiscal balance (% of GDP) -3.2 -3.3 -3.1 -3.1 -3.0 -2.7 Revenues (% of GDP) 15.3 15.8 16.3 15.4 15.3 15.3 2 Debt (% of GDP) 58.6 58.3 57.5 57.3 57.2 56.9 1 Primary balance (% of GDP) -0.4 -0.1 0.4 0.5 0.7 0.9 3,4 International poverty rate ($2.15 in 2017 PPP) 0.8 0.9 0.8 0.8 0.8 0.7 3,4 Lower middle-income poverty rate ($3.65 in 2017 PPP) 4.0 3.9 3.2 3.0 2.8 2.8 3,4 Upper middle-income poverty rate ($6.85 in 2017 PPP) 21.5 17.9 15.8 15.4 15.0 14.4 GHG emissions growth (mtCO2e) 0.3 -0.7 2.5 2.5 2.8 2.8 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Fiscal balances are shown for the non-financial public sector (i. e. excluding central bank quasi-fiscal balances). 2/ Consolidated public sector debt. 3/ Calculations based on SEDLAC harmonization, using 2023-ECNFT-Q03. Actual data: 2023. Nowcast: 2024. Forecasts are from 2025 to 2027. 4/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 23 This outlook reflects information available as of April 10, 2025. 1 2 ECUADOR Population Poverty million millions living on less than $6.85/day 18.1 5.3 3 4 Life expectancy at birth School enrollment Ecuador faces structural challenges centered around years primary (% gross) low-growth, low quality employment, and strained fiscal accounts. The government passed reforms that improved 77.9 97.3 5 6 the fiscal stance, but consolidation needs to be sustained. GDP GDP per capita Medium-term priorities include addressing the energy crisis current US$, billion current US$ and enhancing security. Slow growth expects to stall poverty reduction. Removing barriers to private sector development 118.2 6515.7 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2023 (2017 PPPs). 3/ 2022. will boost investment and unlock sustainable growth. 4/ 2023. 5/ 2024. 6/ 2024. During the commodity boom, growth relied on unsustainable fiscal Key conditions and challenges spending, eroding fiscal buffers critical for a dollarized economy. The 2008 debt default to finance a large investment program has Ecuador's average growth was 1.5 percent between 2015 since limited access to private international markets. Despite and 2023, significantly lower than the 5.1 percent during the progress in reducing the fiscal deficit from 9.8 percent in 2016 to 2004–2014 commodity boom. Structural issues such as rigid near balance in 2022 and stabilizing public debt, fiscal revenues re- labor regulations, low-quality education, barriers to business- main volatile due to oil price dependence, and spending remains es, price distortions, preferential treatment for state-owned high due to the activity of state-owned enterprises and subsidized enterprises, and trade restrictions, along with climatic shocks fuel and energy prices. and rising crime, have hindered productivity growth and poverty reduction. Recent developments Job quality remains a challenge, with over half the workforce in the informal sector and 97 percent of formal businesses being micro Real GDP contracted by an estimated 2.5 percent in 2024. or small enterprises. Women are disproportionately in low-quali- Energy shortages, crime and political uncertainty led to de- ty jobs, making up 67.1 percent of part-time and below-minimum- clines in private consumption and investment. The worst wage jobs. Nearly one in four Ecuadorians lives in poverty, and one drought in 60 years caused nationwide blackouts and power in ten in extreme poverty, with inequality largely unchanged over rationing. Despite a decline in the homicide rate, it remained the past decade. To revitalize growth, Ecuador must boost private historically high. Output fell across all sectors, especially in investment in competitive sectors like mining and agriculture by re- manufacturing and services. Fiscal tightening further con- ducing barriers to private sector development, strengthening the tributed to the downturn. However, exports increased, driven insolvency framework, promoting competition and trade, and im- by agriculture and fishing products. Inflation averaged 1.6 per- proving labor regulations. cent for the year. FIGURE 1 / Real GDP growth and contributions to real GDP growth FIGURE 2 / Actual and projected poverty rates and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 10 50 7000 8 45 6000 40 6 5000 35 4 30 4000 25 2 3000 20 0 15 2000 -2 10 1000 5 -4 0 0 2022 2023 2024e 2025f 2026f 2027f 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Consumption Investment Inventories International poverty rate Lower middle-income pov. rate Exports Imports GDP growth Upper middle-income pov. rate Real GDP pc Sources: Banco Central de Ecuador and World Bank estimates. Source: World Bank. Notes: See footnotes in table on the next page. 24 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. Labor market shocks led to a 3 percent decline in real labor in- expected to maintain an upward trend, supporting medium-term comes, raising poverty to 31.8 percent (US$6.85/day, 2017 PPP) growth of around 2 percent. Limited economic growth will con- and stagnating the Gini index at 45.2. Unemployment remained strain household income growth, leading to a mild decline in low at 2.5 percent, but informality rose to 58 percent. poverty to 31.3 percent in 2027 (US$6.85/day, 2017 PPP). Recur- ring rural climate shocks, urban security challenges, and energy The fiscal deficit narrowed from 3.5 percent in 2023 to 1.4 per- shortages could again harm the poorest. cent in 2024, driven by revenue growth from increased VAT, tem- porary taxes, and higher withholding requirements. Public debt The fiscal deficit is expected to surpass 2 percent this year due to rose to 56 percent of GDP due to lower GDP and a negative fis- lower oil revenues but narrow afterwards, driven by an anticipat- cal balance. The IMF approved a 48-month EFF program for US$4 ed oil price recovery and fiscal consolidation efforts. Public debt billion, including US$1.5 billion disbursements in 2024, facilitating is expected to peak at 57.8 percent of GDP in 2026 and stabilize additional financing. thereafter. The current account surplus is forecast to narrow due to lower export prices and higher imports, as domestic income The current account balance posted an estimated record-high recovers. International reserves are projected to increase but will surplus of 4.8 percent of GDP, with higher exports, lower im- not reach adequacy standards in the medium term. Inflation is ports, and increased remittances. International reserves grew expected to remain low. by US$2.4 billion to US$6.9 billion (5.7 percent of GDP and 2.2 months of imports) by the end of 2024, though still low by Several risks might impact this outlook. Domestic risks include international standards. natural hazards that might affect growth and further strain fis- cal accounts. Risks persist in the energy supply sector due to high dependence on hydroelectric generation and elec- Outlook tricity imports. An eventual resurgence of crime is also a source of uncertainty. Furthermore, after the April elections, The impact of commodity price declines may compound the there could be a redefinition of policy priorities. In the medi- potential effects of trade uncertainty and limit growth. Conse- um term, significantly relaxing fiscal consolidation plans and quently, GDP is projected to partially recover in 2025, increasing facing out structural reforms would impair growth. On the to 1.9 percent, supported by energy investments and reduced external front, Ecuador’s reliance on oil revenues makes it political uncertainty following the April elections. Assuming nor- vulnerable to volatile oil prices and weaker than expected mal weather conditions, agricultural and fisheries exports are growth in U.S. or China. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 5.9 2.0 -2.5 1.9 2.0 2.1 Private consumption 6.0 4.2 -2.3 1.8 1.9 2.0 Government consumption 1.4 1.7 -1.6 -1.7 1.4 1.0 Gross fixed capital investment 9.2 0.2 -8.5 3.7 2.6 2.7 Exports, goods and services 7.9 0.8 2.5 3.8 3.2 3.1 Imports, goods and services 9.5 0.6 0.0 3.0 2.8 2.8 Real GDP growth, at constant factor prices 5.7 2.0 -2.5 1.9 2.0 2.1 Agriculture 3.9 2.6 -1.0 2.5 2.0 2.0 Industry 5.5 -0.3 -2.1 1.5 1.5 1.5 Services 6.1 2.9 -2.8 1.9 2.3 2.4 Employment rate (% of working-age population, 15 years+) 63.4 63.1 63.1 63.1 63.1 63.1 Inflation (consumer price index) 3.5 2.2 1.6 2.1 1.8 1.8 Current account balance (% of GDP) 1.8 1.9 4.8 2.9 2.6 2.0 Net foreign direct investment inflow (% of GDP) 0.8 0.3 0.4 0.8 1.0 1.0 Fiscal balance (% of GDP) 0.0 -3.5 -1.4 -2.3 -1.5 -1.1 Revenues (% of GDP) 38.9 36.0 38.7 36.9 37.3 37.2 Debt (% of GDP) 57.2 54.3 56.0 57.4 57.8 57.6 Primary balance (% of GDP) 0.5 -2.6 -0.3 -1.3 -0.7 -0.4 1,2 International poverty rate ($2.15 in 2017 PPP) 3.2 3.8 5.8 5.5 5.5 5.5 1,2 Lower middle-income poverty rate ($3.65 in 2017 PPP) 9.5 10.3 12.7 12.5 12.3 12.2 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) 29.9 29.6 31.8 31.7 31.5 31.3 GHG emissions growth (mtCO2e) 2.3 0.2 -2.2 0.1 0.1 0.2 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on SEDLAC harmonization, using 2023-ENEMDU. Actual data: 2023. Nowcast: 2024. Forecasts are from 2025 to 2027. 2/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 25 This outlook reflects information available as of April 10, 2025. 1 2 EL SALVADOR Population Poverty million millions living on less than $6.85/day 6.3 1.6 3 4 Life expectancy at birth School enrollment El Salvador has faced persistent fiscal, external, and structur- years primary (% gross) al imbalances, resulting in stable yet low growth and recently increasing poverty rates. To address challenges, El Salvador’s 71.5 91.1 5 6 reform agenda is focusing on enhancing fiscal sustainability, GDP GDP per capita financial stability, and resilience. Growth is projected at 2.6 current US$, billion current US$ percent in 2024, slowing to 2.2 percent in 2025 and gradual- ly accelerating to 2.9 percent by 2027 as fiscal consolidation 35.4 5579.7 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2023 (2017 PPPs). 3/ 2022. efforts increase confidence. 4/ 2023. 5/ 2024. 6/ 2024. Extended Fund Facility Arrangement for El Salvador aimed at sup- Key conditions and challenges porting fiscal consolidation, enhancing financial stability, and im- proving governance and transparency. Support from other MDBs As a small, dollarized economy closely tied to the U.S. through is expected to follow and will be crucial in fostering growth-enhanc- trade and remittances, El Salvador grew at an average annual rate ing reforms that ensure public finance sustainability and strength- of 2.1 percent from 2000 to 2024, with official poverty dropping en resilience to both economic and climate-related shocks. by 14 percentage points to 30.3 percent in 2023. However, chal- lenges remain, including significant fiscal and external imbalances, low productivity, and rising poverty pressures. These pressures are Recent developments linked to low-quality jobs and insufficient human capital. El Salvador’s economy grew by 2.6 percent in 2024—down 0.9 per- Since 2022, stringent security measures have significantly reduced centage points from 2023—mainly due to severe flooding that dis- gang violence, boosting market confidence and generating eco- rupted construction and delayed public investment in the first se- nomic gains. The government has also made progress in address- mester. The economy rebounded in the second semester, driven by ing fiscal and external imbalances by approving an austere 2025 booming tourism and a recovery in public and private investment as budget, clearing domestic arrears, and reducing short-term financ- the adverse impacts of climate events subsided. Strong remittances, ing pressures through three recent debt buyback operations. despite a mild deceleration, and improved security continued to These efforts contributed to a decline in sovereign spreads by more boost private consumption, which grew by 3.2 percent. Inflation fell than 3,100 basis points (bps) from July 2022 to February 2025. sharply from 4.0 percent in 2023 to 0.9 percent in 2024, driven by lower food prices and reduced global inflationary pressures. Comprehensive reforms are needed to diversify the economy, attract foreign direct investment (FDI), and further reduce pover- In 2024, the fiscal deficit narrowed to 4.4 percent of GDP from 4.7 ty and inequality. In February 2025, the IMF board approved an percent in 2023, while the primary deficit fell by 0.7 percentage FIGURE 1 / El Salvador sovereign spread (EMBIG) FIGURE 2 / Actual and projected poverty rates and real GDP per capita Basis points Poverty rate (%) Real GDP per capita (constant LCU) 4000 60 6000 3500 50 5000 3000 40 4000 2500 30 3000 2000 20 2000 1500 1000 10 1000 500 0 0 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 0 International poverty rate Lower middle-income pov. rate Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25 Upper middle-income pov. rate Real GDP pc Source: JP Morgan. Source: World Bank. Notes: See footnotes in table on the next page. 26 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. points to 0.1 percent of GDP. This was driven by a 7.3 percent rise is expected to average 1.8 percent. The current account deficit in government revenues as improved security boosted business is projected to stabilize at around 1.1 percent of GDP by 2027, activity, consumption, and tax collection. However, expenditure on supported by increasing exports, rising tourism receipts, and ro- a one-off public employee voluntary retirement scheme and high bust remittance flows, though lower as share of GDP. interest payments prevented a narrower gap. Public debt peaked at 88.8 percent of GDP in 2024, despite three buyback operations Poverty, measured at the upper-middle-income line of US$6.85/ that alleviated short-term fiscal pressures. day (2017 PPP), is estimated to have increased to 25 percent in 2024 and to increase slightly in the following years, due to The current account deficit widened to 1.8 percent of GDP, driven the expected slowdown in the growth of remittances and GDP in by slowing remittance growth, weaker goods exports, and rising 2025 and 2026. imports, which more than offset increased tourism receipts. Deficit financing came mainly from market debt, development bank loans, El Salvador’s fiscal consolidation is projected to reduce the and FDI inflows. Although international reserves increased by $634 deficit from 4.4 percent of GDP in 2024 to 1.7 percent million, their coverage—only 2.5 months of imports—remains in- by 2027, driven primarily by expenditure-based measures. sufficient for a dollarized economy. These include hiring and wage freezes as well as a civil service reform, which are projected to decrease the public In 2023, official poverty rates indicated that about a third of the wage bill by 1.6 percentage points. Improvements in public population lived in poverty. Compared to 2022, official rates in- financial management will further enhance spending efficien- creased the most in urban areas and among adults, driven by cy and facilitate the phase-out of untargeted subsidies. Con- higher labor inactivity and unemployment among those in the sequently, the primary surplus is forecast to reach 3.4 per- bottom 40 percent. Nonetheless, inequality remains among the cent of GDP by 2027, with public debt declining from 88.8 lowest in the region. percent to 86.0 percent of GDP. El Salvador’s macroeconomic outlook is broadly positive, though Outlook subject to downside risks. Uncertainty in trade policy, elevated global interest rates, and climate shocks could dampen growth Weaker global economic activity and reduced public spending prospects and worsen external and fiscal balances. The govern- and investment are expected to dampen growth to 2.2 percent ment's commitment to fiscal consolidation, proactive debt man- in 2025. Growth is projected to gradually recover to 2.4 percent agement, structural reforms, and enhanced security measures are in 2026 and 2.9 percent in 2027, driven by higher private in- expected to help mitigate these risks, bolster stability, and rein- vestment and progress in structural reforms. By 2027, inflation force investor confidence. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 3.0 3.5 2.6 2.2 2.4 2.9 Private consumption -0.1 1.6 3.2 2.7 2.9 2.9 Government consumption 0.2 3.3 2.4 -4.6 -2.9 -0.4 Gross fixed capital investment 3.1 9.4 4.7 2.4 4.3 4.6 Exports, goods and services 12.0 5.3 12.1 5.6 3.7 3.5 Imports, goods and services 2.9 -1.4 8.0 3.3 3.3 3.3 Real GDP growth, at constant factor prices 3.0 3.5 2.6 2.2 2.4 2.9 Agriculture -0.7 -0.6 1.0 1.2 1.4 1.5 Industry 1.9 3.8 0.4 1.5 2.0 2.5 Services 3.7 3.7 3.6 2.5 2.6 3.1 Employment rate (% of working-age population, 15 years+) 58.2 58.5 58.5 58.5 58.5 58.5 Inflation (consumer price index) 7.2 4.0 0.9 1.8 1.8 1.8 Current account balance (% of GDP) -6.7 -1.1 -1.8 -1.5 -1.2 -1.1 Net foreign direct investment inflow (% of GDP) 0.5 2.1 1.8 1.9 2.1 2.3 1 Fiscal balance (% of GDP) -2.7 -4.7 -4.4 -3.4 -2.1 -1.7 Revenues (% of GDP) 24.7 24.9 25.5 25.8 25.9 26.3 2 Debt (% of GDP) 79.5 85.3 88.8 89.2 87.9 86.0 1 Primary balance (% of GDP) 2.0 -0.8 -0.1 1.6 2.6 3.4 3,4 International poverty rate ($2.15 in 2017 PPP) 3.4 3.1 3.1 3.0 2.9 2.9 3,4 Lower middle-income poverty rate ($3.65 in 2017 PPP) 8.6 7.7 7.7 7.6 7.6 7.6 3,4 Upper middle-income poverty rate ($6.85 in 2017 PPP) 27.5 24.8 25.1 25.2 25.3 25.8 GHG emissions growth (mtCO2e) 0.6 0.8 1.2 1.2 1.4 1.6 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Fiscal and Primary Balance correspond to the non-financial public sector. 2/ Debt is total public debt. 3/ Calculations based on SEDLAC harmonization, using 2023-EHPM. Actual data: 2023. Nowcast: 2024. Forecasts are from 2025 to 2027. 4/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 27 This outlook reflects information available as of April 10, 2025. 1 2 GRENADA Population Poverty thousand thousands living on less than $6.85/ day 117.2 15.9 3 4 Grenada’s prudent preparation and swift action helped to Life expectancy at birth School enrollment years primary (% gross) limit the impact of Hurricane Beryl, ensuring that its econ- omy will continue growing. Despite the post-Beryl recon- 75.3 83.4 struction needs, the country is expected to reduce its debt 5 6 due to strong revenues and disaster risk management. GDP GDP per capita current US$, billion current US$ Complying with established fiscal rules will be critical for Grenada to sustain inclusive growth and make continued 1.4 11871.6 progress in poverty and inequality reduction. Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2018 (2017 PPPs). 3/ 2022. 4/ 2021. 5/ 2024. 6/ 2024. Hurricane Beryl, a Category 4 hurricane, made landfall in July Key conditions and challenges 2024, causing damages estimated at 16.5 percent of 2023 GDP. As a result, the government suspended the primary balance Grenada outperformed its Eastern Caribbean peers, achieving rule under the FRA to provide enough fiscal space for post-dis- an average annual GDP growth of 3.9 percent between 2015 aster recovery, focusing support on the hardest-hit households and 2019, while keeping relatively low public debt. Growth has and businesses. been supported by structural reforms initiated in 2015 with the Fiscal Responsibility Act, which was replaced by the 2023 Adherence to fiscal rules and enhancing public finances are Fiscal Resilience Act (FRA) to simplify rules, broaden the de- crucial for inclusive growth, poverty reduction, social protec- finition of public debt, and strengthen the medium-term fis- tion, and resilience against natural disasters. Despite escape cal strategy. The Eastern Caribbean Currency Union’s (ECCU) clauses in the fiscal rule framework, it is important to continue fixed exchange rate and sound policies anchor low inflation budget prudence, enhance revenue mobilization and improve and price stability. spending efficiency. Reforms are needed to improve Citizenship- by-Investment (CBI) revenue management and budget planning Grenada's economy relies heavily on tourism, making it processes through the timely preparation and publication of a vulnerable to global business cycles and natural disasters, Medium-Term Fiscal Framework. which increases the population’s vulnerability to poverty. In 2018, about 14 percent of the population lived on less than $6.85 a day (2017 Purchasing Power Parity). Inequality, mea- Recent developments sured by the Gini index, was 43.8 in 2018, which is high by international standards. Gender disparities in economic op- Despite the devastation of Hurricane Beryl, Grenada’s economy portunities persist, and youth unemployment is significantly continued growing at 3.7 percent in 2024, supported by tourism above the national average. and construction. Notwithstanding damages to around 10 percent FIGURE 1 / Key macroeconomic variables FIGURE 2 / Actual and projected poverty rates and real GDP per capita Percent of GDP Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 12 90 20 30000 10 80 18 25000 8 70 16 6 60 14 20000 12 4 50 10 15000 2 40 8 0 30 10000 6 -2 20 4 5000 -4 10 2 -6 0 0 0 2022 2023 2024e 2025f 2026f 2027f 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate Debt-GDP (rhs) Primary balance GDP growth rate Upper middle-income pov. rate Real GDP pc Source: World Bank staff estimates. Source: World Bank. Notes: See footnotes in table on the next page. Notes: e= estimate; f = forecast. 28 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. of Grenada’s total tourism accommodations, the core tourism in- frastructure on the main island stayed operational. Stayover ar- Outlook rivals increased by 25 percent in January-September 2024 com- pared to the same period in 2023. Inflation moderated from 2.7 Growth is projected at 3.8 percent in 2025, with an average of 3.1 per- percent in 2023 to 1.1 percent in 2024, driven by lower import cent over 2026-2027, driven by tourism and re-construction efforts. prices that offset price pressures from sizable minimum wage in- The agriculture sector is expected to recover more gradually. Infla- creases in early 2024. Poverty ($6.85 a day in 2017 PPP) is estimat- tion is projected at 1.5 percent in 2025 and converge to 2.0 percent ed to have declined to 13.1 percent in 2024, falling below pre-pan- thereafter. The current account deficit is projected to widen to 14 per- demic levels in 2023. cent of GDP in 2025, driven by reconstruction efforts, higher food import demand, and reduced exports of fish and fishery products The current account deficit is estimated to have widened in to the US due to tariffs, despite the expansion of tourism receipts. 2024, as the increased import bill for construction projects Poverty is expected to continue its downward trend. exceeded the recovery in tourism-driven exports. Remittances slowed to 5.9 percent of GDP in 2024, from a peak of 6.6 per- Public expenditures are expected to rise to 39.1 percent of GDP in cent of GDP in 2020, but increased from 5.8 percent of GDP in 2025, amid post-hurricane reconstruction and higher wages, but are 2023. This is unlikely to have impacted poverty, as the wealthi- projected to decline after 2025 due to reduced capital spending. Ex- est households receive most remittances. CBI inflows increased ceptional non-tax revenues, including strong past CBI performance to an estimated 14.8 percent of GDP in 2024, supporting both and the CCRIF insurance payout, are expected to normalize over the public and private investment. Foreign Direct Investment (FDI) projection period. Consequently, total revenue is estimated to aver- and concessional loans fully financed the current account deficit age 30 percent of GDP over 2025-2027, and the primary deficit is in 2023 and 2024. Imputed reserves covered approximately 5.2 projected to average 1.6 percent of GDP. Public debt (71.4 percent months of imports in 2024. of GDP in 2025) is expected to continue its downward trajectory. The fiscal surplus reached 4.7 percent of GDP in 2024, as The risk outlook is skewed towards the downside, with potential revenues increased to 44.1 percent of GDP due to higher challenges including delays in the resumption of fiscal rules, an un- CBI revenue inflows and resilient economic activity. Public certain global trade outlook, economic slowdown in key tourist- sector debt decreased from 75.2 percent of GDP in 2023 origin countries, reduced FDI, fewer CBI applications, lower remit- to 73.3 in 2024. tances, natural disasters, and the impact of natural disasters. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 7.3 4.7 3.7 3.8 3.4 2.7 Real GDP growth, at constant factor prices 6.2 2.2 3.7 3.8 3.4 2.7 Agriculture -16.8 -18.1 -10.5 1.4 2.5 2.5 Industry 17.4 -2.9 2.9 7.1 5.6 4.2 Services 5.5 5.2 4.7 3.1 2.8 2.3 Inflation (consumer price index) 2.6 2.7 1.1 1.5 2.0 2.0 Current account balance (% of GDP) -11.0 -9.1 -13.3 -14.0 -10.6 -10.3 Fiscal balance (% of GDP) 0.9 8.0 4.7 -8.6 -3.7 -0.5 Revenues (% of GDP) 32.7 36.9 44.1 30.5 29.3 29.2 1 Debt (% of GDP) 78.8 75.2 73.3 71.4 66.5 65.2 Primary balance (% of GDP) 2.5 9.5 8.0 -5.0 -1.2 1.5 2,3 International poverty rate ($2.15 in 2017 PPP) 0.3 0.3 0.1 0.1 0.1 0.1 2,3 Lower middle-income poverty rate ($3.65 in 2017 PPP) 1.3 1.3 1.1 1.1 1.1 1.0 2,3 Upper middle-income poverty rate ($6.85 in 2017 PPP) 14.1 13.7 13.1 12.6 11.9 11.9 GHG emissions growth (mtCO2e) 1.6 1.2 1.3 1.3 1.2 1.1 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ The debt coverage over the period 2023-2026 was expanded to include the non-guaranteed debt of all SOEs, aligned with the new FRA. 2/ Calculations based on CONLAC harmonization, using 2018-SLCHB. Actual data: 2018. Nowcast: 2019-2024. Forecasts are from 2025 to 2027. 3/ Projection using neutral distribution (2018) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU. Macro Poverty Outlook / April 2025 29 This outlook reflects information available as of April 10, 2025. 1 2 GUATEMALA Population Poverty million millions living on less than $6.85/day 18.4 10.5 3 4 Life expectancy at birth School enrollment While Guatemala’s GDP has grown consistently, poverty years primary (% gross) and inequality remain high at levels observed a decade ago. In 2024, growth accelerated, inflation was below the 68.7 103.0 5 6 central bank target and the current account registered GDP GDP per capita another surplus. The government is expanding investment current US$, billion current US$ and social expenditure, while pursuing structural reforms, but faces bottlenecks in both areas. 108.9 5920.8 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2023 (2017 PPPs). 3/ 2022. 4/ 2023. 5/ 2024. 6/ 2024. under five stunted in 2022). Female labor force participation re- Key conditions and challenges mains one of the lowest in the region (at 32.5 percent, a 32.3 p.p. gap compared to men). Guatemala is a well-managed economy. It grew on average 3.5 percent in the last decade supported by a growing labor force. Guatemala’s challenge is to leverage its strong macroeconomic An inflation targeting regime, with a managed exchange rate, has performance to transition to a higher and more inclusive growth. delivered on price stability: inflation averaged 4.2 percent in the The government is expanding public investment and social ex- last decade. It has had current account surpluses since 2016, with penditures, while pursuing structural reforms, such as the enact- comfortable international reserves. The government has man- ment of its first anti-trust law and improvements to infrastruc- aged finances prudently over the last decade, with an average ture frameworks. It increased the budget for investment and so- budget deficit of 1.7 percent of GDP and public debt below 30 cial expenditures in 2024 but did not spend all of it. Investment percent of GDP. in 2024 was nearly half of that in 2023, and social registry and programs reached 107,000 households in 2024, while the 2027 However, poverty and inequality have been stagnant since 2014. target is 500,000. While the government’s policy is consistent with Poverty incidence was 57.9 percent in 2023 (at the US$6.85/day higher growth and lower poverty, it needs to improve efficiency 2017 PPP line), the highest in the Latin America and Caribbean to achieve these goals. (LAC) region, and the Gini coefficient measuring income inequal- ity remained high (0.45). High informality and low productivity have prevented the labor market from driving poverty reduction. Recent developments With high disparities between urban and rural areas in access to basic services, poor households and ethnic minorities face un- Guatemala experienced positive developments in 2024. GDP grew equal opportunities, leading to social exclusion and poor out- 3.7 percent with higher growth by the financial, information and comes, including high malnutrition rates (44 percent of children communication technologies, and retail sectors. In 2024, inflation FIGURE 1 / GDP growth in Guatemala and remittances to FIGURE 2 / Actual and projected poverty rates and real GDP per Guatemala (2019-2027) capita Real GDP (percent, y/y) Remittances (percent of GDP) Poverty rate (%) Real GDP per capita (constant LCU) 25 25 70 40000 20 60 35000 20 30000 50 15 15 25000 40 10 20000 30 10 15000 5 20 10000 5 0 10 5000 0 0 -5 0 2014 2016 2018 2020 2022 2024 2026 2019 2020 2021 2022 2023 2024 2025f 2026f 2027f International poverty rate Lower middle-income pov. rate Guatemala Remittances to Guatemala (rhs) Upper middle-income pov. rate Real GDP pc Sources: Central Bank of Guatemala and World Bank. Source: World Bank. Notes: See footnotes in table on the next page. 30 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. averaged 2.9 percent, with food inflation at 5.1 percent, while hous- GDP carry-over in 2025, credit growth and remittances, but weight- ing and transport experienced deflation at -0.2 percent and -0.9 ed down by lower exports. Inflation is expected to remain with- percent, respectively. The budget deficit was near 1 percent of GDP in the central bank target (4 percent +/- 1 p.p.), with room to ac- and debt stock around 28 percent of GDP. Bank credit grew 12 per- commodate shocks. Given the weak poverty growth elasticity (-0.3), cent year-on-year, with non-performing loans at 2.5 percent of to- poverty is expected to remain high around 57.2 and 56.6 percent tal credit stock in 2024. in 2025 and 2026. The current account accumulated a surplus of 3.2 percent of GDP Remittances growth is expected to peak in 2025 due to lower until September. Goods’ exports grew just 2 percent for the whole growth and changes in immigration policy in originator countries. year, while good’s imports grew 7.2 percent in the whole year, re- Exports growth will increase slightly, supported by service exports flecting a higher growth in volumes (11.4 percent) than in prices. growth. The current account is expected to record smaller surplus- Remittances grew 8.6 percent in 2024, reaching 19.8 percent of es starting in 2026 due to higher GDP and import growth, but con- GDP. International reserves reached US$24.4 billion around nine sistent with comfortable international reserves. months of imports, by end-2024. The government plans to increase public investment and social While employment rates are high, close to 98 percent, the quality expenditures, while keeping tax rates unchanged. Expenditures of jobs is poor, particularly for youth and women. The average real are expected to grow from 14.1 percent of GDP in 2024 to 15.4 labor household income declined 32 percent from 2014 to 2023, in 2027, while revenues will increase from 13.1 to 13.5 percent of due to stagnant labor productivity. Wages have fallen across all ed- GDP in the same period, driven by improvements in tax admin- ucation levels and returns to education have declined, particular- istration efficiency. The budget deficit will average 1.8 percent of ly for the better-off. The labor income fall has been partially com- GDP from 2025 to 2027, while debt is expected to remain below pensated by other sources of income, mainly remittances, which 30 percent of GDP. increased 67 percent between 2014 and 2023. The main risk to the outlook is changes to migration and trade policies. The immediate effect in Guatemala is a reduction in ex- Outlook ports, consequently affecting GDP growth. However, the country may benefit from trade diversion, particularly regarding clothing Guatemala’s outlook is positive, but clouded by heightened uncer- exports. Remittances, which influence consumption, may decrease tainty. GDP growth is expected to reach 3.5 percent in 2025 with and thus reduce GDP. The impacts on prices are uncertain, but re- slightly higher growth in following years, supported by a positive cessionary factors could dominate and lower expected inflation. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 4.2 3.5 3.7 3.5 3.8 3.8 Private consumption 4.3 4.4 5.2 3.7 3.9 4.0 Government consumption 7.2 3.3 2.4 7.3 1.7 1.9 Gross fixed capital investment 4.3 7.4 5.3 6.6 7.9 7.4 Exports, goods and services 7.5 -2.5 3.1 0.4 3.0 2.9 Imports, goods and services 4.8 5.9 7.2 4.8 4.8 4.8 Real GDP growth, at constant factor prices 4.4 3.1 3.7 3.4 3.7 3.8 Agriculture 2.8 2.2 1.1 3.5 3.0 3.0 Industry 4.6 2.5 2.0 3.3 3.3 3.3 Services 4.6 3.5 4.8 3.5 4.0 4.1 Employment rate (% of working-age population, 15 years+) 57.2 57.3 59.8 59.7 59.5 59.4 Inflation (consumer price index) 6.9 6.3 2.9 2.7 4.0 4.0 Current account balance (% of GDP) 1.3 3.1 3.0 2.0 1.4 0.9 Net foreign direct investment inflow (% of GDP) 0.8 0.8 1.0 1.2 1.4 1.6 Fiscal balance (% of GDP) -1.7 -1.3 -0.9 -1.6 -1.8 -2.0 Revenues (% of GDP) 12.9 12.8 13.1 13.4 13.5 13.6 Debt (% of GDP) 29.0 27.2 28.2 28.7 29.0 29.2 Primary balance (% of GDP) -0.1 0.4 1.2 0.5 0.2 0.1 1,2 International poverty rate ($2.15 in 2017 PPP) .. 10.9 11.7 12.1 12.5 12.8 1,2 Lower middle-income poverty rate ($3.65 in 2017 PPP) .. 27.0 27.3 27.4 27.4 27.1 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) .. 57.9 57.3 57.2 56.6 55.8 GHG emissions growth (mtCO2e) 4.2 3.0 3.0 2.8 2.8 2.6 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on SEDLAC harmonization, using 2023-ENCOVI. Actual data: 2023. Nowcast: 2024. Forecasts are from 2025 to 2027. 2/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 31 This outlook reflects information available as of April 10, 2025. 1 2 GUYANA Population Poverty million 0.8 .. 3 4 Life expectancy at birth School enrollment Guyana remains one of the world's fastest-growing years primary (% gross) economies following the development of its oil and gas (O&G) sector. The government is implementing an ambitious 66.0 99.0 5 6 investment program to transform the non-oil economy and GDP GDP per capita address development needs. Lack of recent data on poverty current US$, billion current US$ and equity limits the effectiveness and monitoring of public policies to reduce poverty. Sound management of O&G 24.8 29883.6 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ No recent data available (after resources remains critical for inclusive growth. 2000). 3/ 2022. 4/ 2023. 5/ 2024. 6/ 2024. Guyana also launched a Global Biodiversity Alliance, aiming to de- Key conditions and challenges velop a market for biodiversity credits beyond carbon. Guyana is a small state with abundant natural resources, in- Guyana’s oil revenues are held in the Natural Resource Fund cluding significant oil and gas reserves and extensive forest cov- (NRF), a sovereign wealth fund governed by the NRF Act 2021. er. With much of its territorial waters still unexplored, Guyana’s The NRF Act was amended in 2024 to increase the pace of gross oil resources are conservatively estimated at over 11 bil- withdrawals and enable additional public investments. However, lion barrels, one of the world’s largest on a per capita basis. The faster withdrawals also raise the risk of increasing spending inef- start of oil production in 2019 led to an unprecedented rate of ficiency, accelerating inflation, and dampening competitiveness of economic growth. non-oil sectors. A reliance on oil revenues may also contribute to economic imbalances and vulnerabilities to commodity price fluc- Guyana's resource wealth is helping address longstanding social tuations. Transparent and accountable governance, along with ro- and economic needs. It helped finance the pandemic response and bust public financial management, can help ensure equitable and is addressing infrastructure gaps and human development needs. sustainable growth. Poverty and social exclusion have been prevalent in the hinterland regions and among indigenous Amerindians. Agriculture, forestry, and fishing are important drivers of job creation and poverty re- Recent developments duction, as over 70 percent of the working-age population resides in rural areas. However, a lack of recent data inhibits assessing Real GDP growth accelerated to 43.4 percent in 2024, fueled by progress on poverty reduction and social inclusion. strong expansions in both the oil and non-oil sectors. Oil pro- duction reached 225 million barrels as the third oil field reached Guyana is a pioneer in the carbon credit market, becoming the first full capacity, supporting an oil GDP growth of 57.4 percent. The country to sell ART-TREES certified credits for forest conservation. non-oil economy also grew by 13.1 percent, driven mainly by FIGURE 1 / Real GDP (oil and non-oil) and oil production, FIGURE 2 / Natural Resource Fund (NRF) assets, inflows, and 2022-2027 outflows, 2022-2027 Real GDP (GYD millions, 2012 prices) Thousands of barrels per day US$ (billions) 10,000 1,200 5 9,000 1,000 4 8,000 7,000 800 3 6,000 5,000 600 2 4,000 400 1 3,000 2,000 200 1,000 0 2022 2023 2024e 2025f 2026f 2027f 0 0 Inflows (revenue deposits and nominal return) 2022 2023 2024e 2025f 2026f 2027f Outflows (withdrawals to budget) Oil GDP Non-Oil GDP Oil production (rhs) Assets (closing balance) Sources: Government of Guyana and World Bank staff estimates. Source: Government of Guyana. Notes: e= estimate, f= forecast. Notes: Projections from 2025 assume yearly withdrawal of maximum amounts allowed by the Fiscal Enactments (Amendment) Act 2024; e= estimate, f= forecast. 32 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. construction, manufacturing, and agriculture, supported by sub- from 2025 to 2027. Growth will be driven by positive spillovers stantial public investment. from the oil sector supported by the Local Content Act and an expanding public investment program. Inflation is expected to Inflation remained low in 2024, with the urban consumer price in- be moderate in 2025 but rise gradually over the medium term dex increasing by an average of 2.9 percent. However, food infla- as government investment and consumption increases. Poverty tion was relatively high, averaging 5.7 percent. Higher food prices reduction will depend on the government’s efforts to boost the disproportionately affect the poor and vulnerable, who allocate a purchasing power of poor and vulnerable households and job larger portion of their budget to food than the better off. creation in non-oil sectors. The fiscal deficit widened to 17.9 percent of non-oil GDP in 2024, The fiscal deficit is projected to average 15.1 percent of non-oil despite NRF transfers to the budget of nearly US$1.6 billion (15.7 GDP as the NRF transfers support increased capital spending. percent of non-oil GDP), up from US$1 billion in 2023 (13.7 percent Public debt is expected to rise in 2025, due to higher exter- of non-oil GDP). The NRF withdrawal limit was significantly in- nal debt and slower growth in nominal GDP linked to lower creased in 2024 following legislative amendments to support non- oil prices, but gradually fall thereafter as the economy grows. oil capital investment. The income tax threshold was raised, and a Increased exports of oil, gold, and bauxite will sustain the cur- fuel excise tax was reduced. The central government debt-to-GDP rent account surplus in the medium term, despite fluctuations ratio dropped slightly to 24.1 percent of GDP in 2024 as the econo- linked to the importation of oil production platforms and the my expanded. The current account surplus increased substantially evolution of commodity prices. Net foreign direct investment to 24.4 percent of GDP in 2024 (from 9.9 percent in 2023), large- flows are expected to remain negative due to the repatriation ly due to increased oil exports. The nominal and real effective ex- of oil sector investments. change rate remained stable in 2024, with a de facto stabilized ex- change rate regime. The near-term outlook is subject to high levels of uncertainty. Downside risks include a global economic slowdown, rising global uncertainty, and a stronger-than-expected decline in oil prices. The Outlook extractive sector is Guyana’s dominant source of growth and fis- cal revenues, which increases the country’s susceptibility to oil- Strong GDP growth is expected over the medium term, driven by related shocks and requires proactive management. Prudent NRF rising oil production, anticipated to reach over 1.3 million barrels management and strengthening the medium-term fiscal frame- per day beyond 2027. A fourth oil development project is expect- work are critical for preventing the economy from overheating. ed to start operations in late 2025, followed by two additional Oil production has environmental consequences that must be projects in 2027, further boosting GDP growth. Real non-oil GDP carefully considered, and the sector may face additional risks is projected to expand by an average of 9.4 percent annually amid global decarbonization efforts. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f 1 Real GDP growth, at market prices (total) 63.3 33.8 43.4 10.0 23.0 24.3 2 Real GDP growth, at market prices (non-oil) 11.5 12.3 13.1 11.6 8.9 7.8 Agriculture 11.7 6.9 11.0 11.4 7.2 6.1 Industry 12.7 16.7 22.1 18.3 13.9 11.7 Services 9.3 10.8 6.7 6.2 5.5 5.0 Inflation (consumer price index) 6.9 2.8 2.9 3.5 4.5 5.5 3 Current account balance (% of GDP) 25.9 9.9 24.4 8.0 25.0 17.6 Net foreign direct investment inflow (% of GDP) -20.7 -6.7 -22.1 -10.5 -21.0 -14.7 4 Fiscal balance (% of GDP) -11.7 -13.3 -17.9 -14.7 -16.3 -14.4 Debt (% of GDP) 24.8 26.7 24.1 32.0 27.7 24.2 4 Primary balance (% of GDP) -11.1 -12.5 -17.1 -13.6 -15.2 -13.3 GHG emissions growth (mtCO2e) 11.3 13.8 18.5 6.7 13.2 11.2 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Total GDP at 2012 prices. 2/ Non-oil GDP at 2012 prices. 3/ BOP definition in current US$. 4/ Share of non-oil GDP. Macro Poverty Outlook / April 2025 33 This outlook reflects information available as of April 10, 2025. 1 2 HAITI Population Poverty million millions living on less than $2.15/day 11.8 2.9 3 Life expectancy at birth School enrollment GDP contracted by 4.2 percent in 2024 amid gang violence years primary (% gross) and an ongoing political-institutional crisis. Agriculture has been the most severely impacted sector, disproportionately 63.7 .. 4 5 reducing the incomes of the poor and vulnerable: nearly 4 in GDP GDP per capita 10 Haitians now live on less than US$2.15/day 2017 PPP. current US$, billion current US$ Despite these challenging conditions, tight monetary policy and continued fiscal consolidation strengthened the macro- 25.2 2142.7 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2012 (2017 PPPs). 3/ 2022. economic framework, helping to reduce inflation. 4/ 2024. 5/ 2024. priorities include an improved governance and justice system and Key conditions and challenges infrastructure to connect rural communities to urban markets. Deep structural challenges including state capture and an un- conducive business environment continue to hamper economic Recent developments growth and poverty reduction. Underdeveloped financial mar- kets and weak competition have contributed to a large infor- Political instability deepened and gang violence increased follow- mal economy. Indefinite suspension of US commercial flights ing Prime Minister Gary Conille’s dismissal by the Transitional to the main airport and continued border shutdown with Presidential Council (CTP) in November 2024. Prime Minister Fils- the Dominican Republic isolate Haiti and constrain domestic Aimé replaced Conille with a mandate to restore security and or- resource mobilization. Economic mobility is hampered by a ganize elections. The underlying instability and gang violence de- weak labor market, dominated by low quality, poorly remu- pressed investor sentiment, and GDP contracted by 4.2 percent nerated jobs, especially for women. Indicators of human cap- in 2024. Agriculture registered the largest decline (-5.6 percent), ital are weak with limited access to quality healthcare and disproportionately affecting the poor and vulnerable, and deep- education: just 4 in 10 children are born in health facilities ening pre-existing inequalities. The industrial sector contracted by and learning-adjusted years of schooling (at 6.1) are below 4.7 percent due to the deteriorating business environment, with the regional average. layoffs in the textile sector. The services sector shrank by 3.9 per- cent, led by the small trade and real estate subsectors. The cur- Haiti faces a deepening fragility trap, as structural challenges, in- rent account deficit (CAD) narrowed from 3.3 percent of GDP in stitutional crisis, persistent gang violence and a growing human- 2023 to 0.5 percent in 2024, as a 21.2 percent drop in exports itarian crisis have undermined development prospects. Disaster was offset by lower imports and higher remittance inflows. Re- risk management and response systems are inadequate to man- mittances have provided a lifeline to recipient households, help- age vulnerability to natural hazards and climate change. Economic ing mitigate food insecurity. FIGURE 1 / Real GDP growth and sectoral contributions to real FIGURE 2 / Actual and projected poverty rates and real GDP per GDP growth (supply side) capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 2 100 70000 1 90 60000 80 0 70 50000 -1 60 40000 50 -2 40 30000 -3 30 20000 20 -4 10000 10 -5 0 0 2018 2019 2020 2021 2022 2023 2024e 2012 2014 2016 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate Agriculture Industry Services GDP Upper middle-income pov. rate Real GDP pc Sources: Haiti Statistical Office (IHSI) and World Bank staff calculations. Source: World Bank. Notes: See footnotes in table on the next page. 34 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. Tax revenues plummeted from 6.3 percent in 2023 to 5.2 per- exports, compounding existing security and business challenges, cent in 2024 as the economy contracted. However, a retrench- but the full impact of the recent measures is difficult to gauge as ment of capital spending and cuts in non-priority current expen- policy shifts may continue to unfold. Exports are forecast to ac- ditures helped contain the fiscal deficit, which narrowed from celerate in 2026 assuming greater clarity on a potential extension 2.1 percent of GDP in 2023 to 0.1 percent in 2024. The com- of a preferential trade agreement on textiles with the USA. A re- bined effect of tight fiscal policy and a better anchored mon- sumption of GDP growth would gradually reverse poverty trends, etary policy stance, with zero monetary financing of the fiscal with the share of Haitians living on less than US$2.15/day 2017 deficit by the central bank (BRH), helped ease price pressures. PPP projected to drop slightly from 37.6 percent in 2025 to 36.7 The gourde appreciated by 1.6 percent against the US dollar in percent by 2027. 2024 owing to tight fiscal and monetary policy, strong remit- tance inflows, and weak imports. A balanced current account in 2025 is forecast to move into deficit by 2026 as growth resumes and imports pick up. Increased govern- Consumer price inflation declined from an average of 44.2 percent ment spending ahead of planned elections and weak agricultural in 2023 to 25.8 percent in 2024. High food inflation (averaging 34.7 productivity are expected to contribute to inflationary pressure in percent in 2024) disproportionately affected the poor and vulner- 2025, moderating over the medium as security conditions improve. able, who spend a larger share of income on food. The share of Tax revenue collection is set to improve gradually as a new general Haitians living on less than US$2.15/day 2017 PPP is estimated to tax code goes into effect. However, the fiscal deficit will widen from have climbed to 36.2 percent in 2024, from 31.1 percent in 2021. 0.1 percent of GDP in 2024 to 1.2 percent in 2025 owing to larger security and elections-related spending. Outlook The path ahead remains fraught with downside risks and depends on an effective political transition and improvements in security. A GDP is forecast to contract by 2.2 percent in 2025. The lingering credible budgetary framework and an appropriate mix of fiscal and political crisis and gang violence are expected to depress private monetary policy will remain key to reducing inflation and strength- investment, while high inflation dampens private consumption. ening growth prospects. Inclusive growth will require strengthen- Modest GDP growth is expected by 2026 as investment increases ing the business environment, expanding social protection, and en- from a low baseline, assuming improvements on the political and hancing the institutional framework for disaster risk management, security fronts. Trade policy changes may further depress textile including better preparedness and response systems. Recent history and projections 2021/22 2022/23 2023/24e 2024/25f 2025/26f 2026/27f Real GDP growth, at constant market prices -1.7 -1.9 -4.2 -2.2 2.0 2.5 Private consumption -0.7 0.1 -5.2 -4.6 1.6 1.1 Government consumption 17.6 3.3 1.6 35.0 2.7 6.7 Gross fixed capital investment -9.9 -17.6 -36.3 -50.0 62.7 50.3 Exports, goods and services 2.4 -9.6 -31.9 -24.5 5.5 6.1 Imports, goods and services 4.9 -0.4 -16.2 -4.8 6.5 7.3 Real GDP growth, at constant factor prices -1.8 -3.6 -4.4 -2.2 2.0 2.5 Agriculture -4.5 -5.6 -5.6 -3.2 1.0 2.0 Industry -0.4 -3.8 -4.7 -1.7 2.5 3.4 Services -1.6 -2.9 -3.9 -2.2 2.0 2.3 Employment rate (% of working-age population, 15 years+) 55.8 55.8 55.8 55.8 55.8 54.9 Inflation (consumer price index) 27.6 44.2 25.8 29.7 20.3 14.1 Current account balance (% of GDP) -2.4 -2.6 -0.6 0.0 -1.1 -1.2 Net foreign direct investment inflow (% of GDP) 0.2 0.1 0.2 0.2 0.1 0.1 Fiscal balance (% of GDP) -3.2 -2.1 -0.1 -1.2 -0.1 0.1 Revenues (% of GDP) 6.6 7.4 6.0 6.4 7.0 7.4 Debt (% of GDP) 26.6 24.8 15.0 16.2 16.3 16.0 Primary balance (% of GDP) -2.9 -1.8 0.2 -0.9 0.1 0.4 1,2 International poverty rate ($2.15 in 2017 PPP) 32.3 34.1 36.2 37.6 37.2 36.7 1,2 Lower middle-income poverty rate ($3.65 in 2017 PPP) 61.4 62.6 65.4 66.7 66.4 65.9 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) 88.0 88.4 89.5 90.0 89.9 89.7 GHG emissions growth (mtCO2e) 0.6 -0.4 -0.4 0.1 1.8 2.5 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on SEDLAC harmonization, using 2012-ECVMAS. Actual data: 2012. Nowcast: 2013-2024. Forecasts are from 2025 to 2027. 2/ Projection using neutral distribution (2012) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. Macro Poverty Outlook / April 2025 35 This outlook reflects information available as of April 10, 2025. 1 2 HONDURAS Population Poverty million millions living on less than $6.85/day 10.8 5.3 3 4 Life expectancy at birth School enrollment Real GDP grew 3.6 percent in 2024, driven by private years primary (% gross) consumption and investment, fueled by robust remit- tances, lower inflation, and access to credit. Growth is 70.7 86.6 5 6 expected to decelerate to 2.8 percent in 2025 and 3.4 GDP GDP per capita percent in 2026, dampened by slower exports, remittances, current US$, billion current US$ and credit growth. High informality and insufficient basic service delivery remain key challenges for poverty and 36.9 3409.4 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2023 (2017 PPPs). 3/ 2022. inequality reduction in the medium term. 4/ 2023. 5/ 2024. 6/ 2024. Key conditions and challenges Recent developments Honduras grew on average 3.7 percent in 2010-19, driven Real GDP growth remained stable at 3.6 percent in 2024. Robust by remittance-fueled households’ consumption. The econ- remittances, lower inflation, and access to credit sustained private omy benefited from prudent macroeconomic management consumption and investment, offsetting the drop in exports due to anchored in the Fiscal Responsibility Law (FRL), adequate lower demand and adverse climate impacts, including from storm foreign reserves and a robust financial sector. Productive Sara in mid-November. capacity is weak, with agriculture and light manufacturing representing key sources of employment and exports, Annual inflation decreased to 4.6 percent in 2024, within the cen- mainly to the US. tral bank target range of 4.0 percent ± 1.0 percentage points (pp), driven by lower international prices and liquidity absorption mea- Honduras remains one of the poorest and most unequal sures, including a 275 basis points hike in the policy rate between countries in the region. By 2024, almost half of Hondurans August and October (to 5.75 percent). lived on less than US$6.85 daily (2017 PPP). Slow poverty reduction is partly explained by informality, labor-market Labor market conditions and poverty slightly improved. Unemploy- gender inequality (74 percent of men vs. 41 percent of ment dropped 1.2 pp y-o-y in June 2024 (to 5.2 percent) with larger women participate), and unequal access to basic services. gains among women (2.3 pp decrease). The official poverty rate de- Food insecurity remains high. The share of rural house- creased from 64.1 percent of households in 2023 to 62.9 percent in holds with unmet basic needs doubles that of urban 2024. Poverty under international lines is estimated to have slightly households. Honduras is highly vulnerable to natural haz- decreased from 2023, except for the rate under the US$2.15/day ards, often overlapping geographically with poverty and line (2017 PPP) which increased to 12.4 percent and remains high. low coping capacity. Inequality (Gini index) remained stable at 47 points. FIGURE 1 / Sectoral value added (indexes, 2010=1) FIGURE 2 / Actual and projected poverty rates and real GDP per capita Index (2010=1) Poverty rate (%) Real GDP per capita (constant LCU) 3.5 60 30000 3.0 50 25000 2.5 40 20000 2.0 30 15000 1.5 20 10000 1.0 10 5000 0.5 0.0 0 0 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate Agriculture Services Industry Upper middle-income pov. rate Real GDP pc Source: World Bank estimates based on data from the Central Bank of Honduras. Source: World Bank. Notes: See footnotes in table on the next page. 36 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. The current account deficit (CAD) widened to an estimated 5.2 Inflation is expected to remain stable in 2025 and decline from percent of GDP in 2024, reflecting deficits in goods, services, and 2026. Upward pressures from the ongoing exchange rate recali- income, partially offset by strong remittances’ growth (6.2 per- bration and higher prices for some food products will be compen- cent y-o-y). Major exports like textiles, coffee, bananas, palm oil, sated by expected declines in oil prices and tighter monetary pol- and shrimp declined due to lower demand, prices, or supply- icy. The CAD is projected to widen in 2025 to -5.3 percent of GDP, side disruptions. The CAD was primarily financed by multilateral reflecting low maquila exports dynamism and slower remittances’ debt and foreign direct investment. Reserves declined through growth, despite improved agricultural-based exports and lower en- October 2024, partly due to net debt repayments, but recovered ergy imports due to milder La Niña impacts, lower oil prices, and to US$8,049.3 million (5 months of non-maquila imports) by higher prices of key export crops. The CAD is projected to narrow end-2024, strengthened by external disbursements. On Decem- from 2026 reflecting improving exports. Reserves are expected to ber 6, the IMF Board approved the first and second reviews of remain around 5 months of non-maquila imports. the ongoing program. Driven by these forces, poverty is forecasted to decline in 2025 The fiscal deficit narrowed to an estimated 1.1 percent of GDP (47.7 percent at the US$6.85/day upper middle-income country in 2024 (from 1.3 percent in 2023), driven by weaker public poverty line, 2017 PPP) and inequality is projected to remain stable. investments’ execution. The non-financial public sector debt re- Labor-market informality and gender gaps will continue limiting mained stable at 47.9 percent of GDP by end-2024. In Novem- households’ potential to generate income. ber 2024, Honduras issued its first thematic sovereign bond for US$700 million. The fiscal deficit is projected to widen to 1.4 percent of GDP in 2025 driven by increased public investments’ execution and social spending, before narrowing to 1 percent of GDP over the medium Outlook term in line with the FRL target, underpinned by expenditure ad- justments and enhanced revenue collection efficiency. Growth is projected to slow to 2.8 percent in 2025 and 3.4 per- cent in 2026, with weaker credit expansion, lower growth in main Downside risks include a significant deceleration of remittances, trading partners, and trade policy shifts hampering exports and persistent exports’ weakness, and higher import prices, which investment. Improved agricultural production and rising public in- could dampen consumption and delay CAD narrowing. More re- vestments’ execution will counterbalance. Remittances are pro- turned migrants may pose labor-market re-entry challenges. Con- jected to remain elevated, at around one fourth of Honduras’ tinued trade policy uncertainty may hamper investment. Natural GDP, despite the continuing mild deceleration of their growth. hazards could raise financing needs. Capacity constraints and leg- GDP growth is expected to strengthen from 2027, supported by islative gridlock as elections near might slow social and structural improving global conditions. reforms, hampering growth and poverty reduction. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 4.1 3.6 3.6 2.8 3.4 3.7 Private consumption 5.7 4.6 4.3 3.1 3.4 3.6 Government consumption -4.1 9.2 5.3 4.8 4.7 4.8 Gross fixed capital investment 2.6 11.2 6.2 2.7 3.4 3.8 Exports, goods and services 6.6 -7.0 -4.8 2.0 3.8 4.3 Imports, goods and services 8.5 -8.6 2.3 3.0 4.0 4.1 Real GDP growth, at constant factor prices 4.1 3.6 3.6 2.8 3.4 3.7 Agriculture 0.3 4.0 -0.7 3.4 3.6 3.7 Industry 7.0 -2.4 0.8 0.9 3.6 4.1 Services 3.8 6.3 5.7 3.5 3.3 3.6 Inflation (consumer price index) 9.1 6.7 4.6 4.6 4.5 4.4 Current account balance (% of GDP) -6.7 -4.1 -5.2 -5.3 -4.8 -4.5 Net foreign direct investment inflow (% of GDP) 2.4 2.5 2.7 2.4 2.5 2.7 1 Fiscal balance (% of GDP) -0.2 -1.3 -1.1 -1.4 -1.0 -1.0 Revenues (% of GDP) 29.9 29.4 29.1 29.5 29.5 29.3 1 Debt (% of GDP) 51.9 47.9 47.9 46.8 46.5 46.3 1 Primary balance (% of GDP) 1.2 0.2 0.4 0.4 0.7 0.7 2,3 International poverty rate ($2.15 in 2017 PPP) .. 12.1 12.4 11.7 11.5 11.3 2,3 Lower middle-income poverty rate ($3.65 in 2017 PPP) .. 25.2 25.0 24.0 23.6 23.4 2,3 Upper middle-income poverty rate ($6.85 in 2017 PPP) .. 49.5 49.3 47.7 47.2 46.7 GHG emissions growth (mtCO2e) -0.9 -0.2 0.9 0.7 1.3 1.6 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Fiscal data refers to non-financial public sector. 2/ Calculations based on SEDLAC harmonization, using 2023-EPHPM. Actual data: 2023. Nowcast: 2024. Forecasts are from 2025 to 2027. 3/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 37 This outlook reflects information available as of April 10, 2025. 1 2 JAMAICA Population Poverty million millions living on less than $6.85/day 2.8 0.4 3 4 Life expectancy at birth School enrollment A series of weather-related shocks and the completion of years primary (% gross) the post-pandemic rebound resulted in an estimated GDP contraction of 0.7 percent for 2024. Sound macroeconomic 70.6 84.5 5 6 management has enabled Jamaica to respond to shocks GDP GDP per capita without significantly impairing fiscal sustainability and current US$, billion current US$ poverty reduction. In the medium term, real GDP growth is expected to converge to its low potential, while poverty 19.9 7019.8 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2021 (2017 PPPs). 3/ 2022. reduction is set to continue at a slower pace. 4/ 2023. 5/ 2024. 6/ 2024. income instability also remain concerns, with nearly half of non- Key conditions and challenges agricultural jobs being informal. Jamaica has been burdened by high debt levels for decades. Since Jamaica is highly vulnerable to external shocks. Agriculture and 2013, the Government has successfully implemented fiscal consol- tourism, which account for over half of employment, are partic- idation measures, reducing the public debt-to-GDP ratio by more ularly vulnerable to weather-related events. The financial sec- than 60 percentage points to 73.4 percent of GDP in FY2023/ tor is stable, well-capitalized, and profitable but also suscep- 24—the lowest level in 25 years. The Government sustained efforts tible to shocks. To strengthen fiscal, financial, and social re- in fiscal consolidation while providing temporary assistance to vul- silience to climatic shocks, Jamaica has been gradually inte- nerable households and businesses. grating climate change adaptation into its policy framework. Further improving the Anti-Money Laundering and Combat- However, Jamaica has been among the slowest growing ting the Financing of Terrorism frameworks and enhancing economies in the region with persistently low productivity financial supervision can strengthen financial stability and at- growth due to a weak business environment, limited innovation, tract private investment. and human capital constraints. The economy has limited diversi- fication, being concentrated in low-productivity services, geared towards tourism. High connectivity costs, inadequate digital in- Recent developments frastructure, and pervasive crime hamper private investment, while fiscal consolidation and relatively high debt service costs After growing at 2.3 percent in 2023, the economy contracted by constrain public investment. The share of Jamaicans living on an average of 2 percent in the first three quarters of 2024. In less than US$6.85 (2017 PPP) per day was 13.7 percent in 2021 2024Q2, the economy underperformed compared to initial expec- and inequality stood high at 39.9 Gini points. Job quality and tations, driven by contractions in construction, manufacturing, and FIGURE 1 / Real GDP growth and sectoral contributions to real FIGURE 2 / Actual and projected poverty rates and real GDP per GDP growth capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 6 16 350000 4 14 340000 2 12 330000 0 320000 10 -2 310000 8 -4 300000 6 -6 290000 4 280000 -8 2 270000 -10 -12 0 260000 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate Agriculture Industry Services Real GDP Upper middle-income pov. rate Real GDP pc Sources: Statistical Institute of Jamaica and World Bank staff calculations. Source: World Bank. Notes: See footnotes in table on the next page. 38 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. services. After Hurricane Beryl hit in July 2024, almost all sec- tors reported negative growth in 2024Q3, particularly agri- Outlook culture and mining, which contracted by 12 and 17 percent, respectively. The economy is estimated to have contracted Growth is expected to recover to 1.7 percent in 2025 and converge by 0.7 percent in 2024. to its potential averaging 1.6 percent over the medium term. Agri- culture, mining, and construction are expected to drive the recov- After year-on-year inflation spiked to 6.4 percent in August 2024, ery. Inflation is projected to stay within the BOJ’s target range (5 driven by Hurricane Beryl’s temporary impact on food and utility ±1 percent). As per capita real income improves, the share of Ja- prices, it stabilized around 5 percent at end-year. With anchored maicans living on less than US$6.85 per day is projected to drop to inflation expectations, the Bank of Jamaica (BOJ) reduced the key 11.0 percent by 2027, still above pre-pandemic levels. policy rate four consecutive times in 2024, by 25 basis points each, reaching 6.0 percent in December 2024. The fiscal balance in the forecast horizon is consistent with the legislated debt-to-GDP target of 60 percent by FY2027/28. Rev- The fiscal stance was bolstered by tax revenues in FY2024/25, enues will be supported by tax mobilization efforts, and spend- mostly income taxes, and non-tax revenues, due to the securitiza- ing is projected to decline marginally, in part due to lower inter- tion of revenue from an international airport. Government expen- est payments. Public debt is expected to reach 60.7 percent of ditures also increased due to hurricane response and the public GDP by 2027. sector compensation restructure, but to a lesser extent than rev- enues. The fiscal surplus is estimated at 0.3 percent in FY2024/25. The current account is expected to remain stable, averaging 0.2 percent of GDP between 2025 and 2027. Foreign direct investment The current account surplus is estimated at 0.4 percent in 2024 is anticipated to recover and fully cover the deficit but stay below amid higher imports and lower tourist arrivals, partly due to Hur- pre-pandemic levels. Gross reserves are projected to remain at ricane Beryl. As of December 2024, reserves remain adequate, healthy levels. covering about 6.6 months of imports and contributing to ex- change rate stability. The near-term outlook is subject to significant uncertainty. Downside risks include a global economic slowdown, rising glob- The share of Jamaicans living on less than US$6.85 per day dropped al uncertainty and worsening climatic events. Recent trade mea- from 13.7 percent in 2021 to 12.2 percent in 2024. Overall unem- sures can have direct and indirect impacts through changes ployment was 3.5 percent in 2024Q4 but was 11 percent for youth in international prices and economic slowdown of major mar- and 13.7 percent for female youth. Around 61.9 percent of work- kets, but the full impact is difficult to gauge as policy shifts ing-age women participated in the labor market compared with may continue to unfold. High uncertainty could curtail invest- 74.5 percent of men. Food insecurity proved an issue in 2024: 32 ments and slow growth, derailing climate change adaptation and percent of all households and 60 percent of those in the poorest debt objectives. Worsening crime could also undermine econom- wealth quintile had moderate to severe food insecurity, according ic growth and hinder poverty reduction efforts, disproportion- to the Multiple Indicator Cluster Survey’ scale. ately affecting vulnerable communities. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 5.2 2.6 -0.7 1.7 1.7 1.6 Real GDP growth, at constant factor prices 5.2 2.6 -0.7 1.7 1.7 1.6 Agriculture 9.0 -5.7 -2.0 3.5 0.9 0.9 Industry -0.4 5.0 -1.5 2.1 1.5 1.4 Services 6.5 2.9 -0.4 1.4 1.9 1.7 Employment rate (% of working-age population, 15 years+) 64.9 64.9 64.7 64.7 64.9 65.3 Inflation (consumer price index) 10.3 6.5 5.5 4.8 5.0 5.0 Current account balance (% of GDP) -0.8 3.0 0.4 0.5 0.1 0.0 Net foreign direct investment inflow (% of GDP) 1.5 2.0 2.2 2.4 2.7 3.1 Fiscal balance (% of GDP) 0.3 0.0 0.3 0.0 -0.9 -0.8 Revenues (% of GDP) 31.6 30.9 34.4 32.6 30.9 30.5 Debt (% of GDP) 80.9 74.2 70.2 66.0 63.4 60.7 Primary balance (% of GDP) 6.1 5.8 6.1 5.2 3.8 3.4 1 International poverty rate ($2.15 in 2017 PPP) 0.3 0.3 0.3 0.3 0.3 0.3 1,2 Lower middle-income poverty rate ($3.65 in 2017 PPP) 2.0 1.7 1.8 1.6 1.6 1.5 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) 12.5 12.1 12.2 11.9 11.5 11.0 GHG emissions growth (mtCO2e) 6.9 4.3 -0.9 1.6 1.6 1.5 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on CONLAC harmonization, using 2021-JSLC. Actual data: 2021. Nowcast: 2022-2024. Forecasts are from 2025 to 2027. 2/ Projection using neutral distribution (2021) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. Macro Poverty Outlook / April 2025 39 This outlook reflects information available as of April 10, 2025. 1 2 MEXICO Population Poverty million millions living on less than $6.85/day 130.9 28.0 3 4 Life expectancy at birth School enrollment Real GDP growth is projected to come to a halt in 2025 as years primary (% gross) uncertainty in trade policy and the revision of the United States-Mexico-Canada Agreement (USMCA) dampen invest- 74.8 102.0 5 6 ment and exports. With gradual growth improvements GDP GDP per capita expected by 2027, the poverty rate is projected to decline. current US$, billion current US$ Spending needs in infrastructure and other key areas might require revenue-boosting measures to safeguard 1853.0 14159.9 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2022 (2017 PPPs). 3/ 2022. debt sustainability in a lower growth environment. 4/ 2022. 5/ 2024. 6/ 2024. Key conditions and challenges To unlock its full potential, the key is to strengthen the drivers of growth. Spending pressures will require revenue-boosting re- Mexico has a strong track record of macroeconomic stability, forms to safeguard debt sustainability and greater participation backed by an independent central bank, a robust financial sector, of private sector to meet investment needs, particularly given in- and a flexible exchange rate. Prudent fiscal management has frastructure needs. In the near term, navigating a turbulent trade kept public debt relatively low and sustainable. However, in- and investment setting and planning for greater trade resilience creased spending on social programs, large public infrastructure will be essential. projects, and continued fiscal support to Petróleos Mexicanos (PEMEX) have contributed to growing fiscal deficits and strained public finances. Recent developments Mexico’s economic growth has lagged its regional and international Real GDP grew 1.5 percent in 2024, driven by consumption and in- peers. Yet, the official multidimensional poverty rate in Mexico, vestment. Domestic demand weakened in the second half of the which assesses income poverty alongside six indicators of social year, with private consumption slowing down to 0.4 percent y-o-y deprivation, fell from 43.2 percent in 2016 to 36.3 percent in and investment contracting by 2.6 percent y-o-y in Q42024. Con- 2022, lifting 5.4 million people out of poverty, driven mainly by la- struction, retail, transport, and professional, scientific and techni- bor market outcomes, including increases in the minimum wage. cal services contributed the most from the supply side. Recent changes to US tariff policy and the upcoming revision of the USMCA are now affecting Mexico's growth prospects and its The current account deficit was 0.3 percent of GDP in 2024, fully fi- role as a destination for foreign direct investment (FDI), given nanced by net FDI. Remittances reached US$64.7bn (+2.3 percent its proximity to major consumer markets, large domestic market, y-o-y), while reserves stood at US$228.8bn by end-2024. Peso ap- and diversified economy. preciated 2.8 percent year-to-date in 2025. FIGURE 1 / Real GDP growth and contributions to real GDP growth FIGURE 2 / Actual and projected poverty rates and real GDP per capita. Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 15 45 200000 10 40 195000 35 190000 5 30 185000 0 25 180000 20 175000 -5 15 170000 -10 10 165000 -15 5 160000 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 0 155000 Gov. cons. Exports GFCF 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Inventories Private cons. Imports International poverty rate Upper middle-income pov. rate Statistical disc. GDP Real GDP pc Sources: National Institute of Statistics and Geography (INEGI), and World Bank Source: World Bank. Notes: See footnotes in table on the next page. staff calculations. 40 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. After a spike in mid-2024, headline inflation continued to decline, uncertainty surrounding trade policy shifts, the upcoming USMCA reaching 3.8 percent y-o-y in February 2025. Core inflation has revision, and the expected slowdown in the U.S. economy. These been on a downward trend since early 2022, dropping to 3.6 per- developments also contribute to a 1 percentage point increase cent. Banxico reduced the policy rate by 50 bps in February to 9.5 in the current account deficit to 1.3 percent of GDP by 2027 as percent. The banking sector maintains high levels of capitalization exports contract. The monetary poverty rate at the upper mid- and liquidity above regulatory requirements, with stress tests sug- dle-income threshold ($6.85/day, 2017 PPP) is expected to slight- gesting that it can absorb significant shocks. ly increase from 20.6 to 20.9 between 2024 and 2025 and then decline to 20.8 in 2026 and 20.4 percent in 2027, driven by im- Mexico’s labor participation rate dropped by 0.6pp to 59.9 percent proving GDP growth. in Q42024 y-o-y, whereas the unemployment rate leveled off at 2.6 percent. Informal employment also declined from 54.8 to 54.5 The fiscal outlook is expected to gradually improve with the over- percent. Labor poverty –the share of the population whose family all deficit declining to 4.0 percent by 2027, driven by a slowdown earnings per capita from labor alone are below the official food in social program spending, and the completion of major infra- poverty line—stood at 35.4 percent. structure projects. The normalization of interest rates as inflation reaches Banxico’s target range in the first half of 2025, further The overall fiscal deficit stood at 5.1 percent of GDP in 2024 supports this outlook. (up from 4.3 percent in 2023). Public sector revenues rose 1.7 percent in real terms y-o-y, driven by higher fuel taxes and oil Mexico's growth forecast faces several risks. Uncertainty over revenues. But expenditures increased at the faster pace of 7.7 trade policy shifts and the upcoming revision of the USMCA percent in real terms, primarily due to higher investment spend- could have more negative impacts on exports, growth, and in- ing, financial costs, and pension outlays. Mexico’s credit rating vestment than those assumed in the baseline. Trade restric- remains above investment grade. Sovereign spreads have stayed tions could lead to slower than expected growth in the U.S. around 310bps in 2025. and the global economy. Stricter border controls and depor- tations could reduce migration to the U.S. and lower remit- tances. Heightened market volatility could dampen investment Outlook and consumption, add fiscal pressures, and reduce exports and FDI. Domestically, uncertainty surrounding the implementation Mexico’s GDP growth is projected to come to a halt in 2025, with of the judicial reform and the restructure of regulatory bodies a gradual recovery to 1.8 percent by 2027—a level below the av- could undermine market confidence, affecting investment and erage growth rate of the past three years. This is primarily due to financial flows. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 3.7 3.3 1.5 0.0 1.1 1.8 Private consumption 4.8 4.2 2.8 1.7 1.9 2.2 Government consumption 2.0 1.8 1.6 1.2 0.8 1.2 Gross fixed capital investment 7.5 16.6 3.3 -0.6 0.0 1.5 Exports, goods and services 9.5 -7.2 3.3 -3.6 1.1 2.5 Imports, goods and services 8.6 3.7 2.7 0.3 1.6 2.7 Real GDP growth, at constant factor prices 3.6 3.2 1.5 0.0 1.1 1.8 Agriculture 1.6 -1.4 -2.3 0.8 1.5 1.6 Industry 4.8 3.4 0.2 -0.1 1.2 1.8 Services 3.1 3.4 2.3 0.0 1.0 1.8 Employment rate (% of working-age population, 15 years+) 59.0 59.8 59.4 59.1 59.1 59.1 Inflation (consumer price index) 7.9 5.5 4.7 3.7 3.6 3.6 Current account balance (% of GDP) -1.2 -0.3 -0.3 -1.4 -1.5 -1.3 Net foreign direct investment inflow (% of GDP) -1.5 -1.7 -1.5 -1.3 -1.4 -1.6 Fiscal balance (% of GDP) -4.3 -4.3 -5.1 -4.5 -4.3 -4.0 Revenues (% of GDP) 22.4 22.1 21.9 21.8 21.9 22.0 Debt (% of GDP) 48.2 47.4 52.7 54.4 55.8 56.5 Primary balance (% of GDP) -1.6 -1.0 -1.4 -0.7 -0.6 -0.4 1,2 International poverty rate ($2.15 in 2017 PPP) 1.2 1.1 1.1 1.1 1.1 1.1 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) 21.8 20.8 20.6 20.9 20.8 20.4 GHG emissions growth (mtCO2e) 2.7 0.3 -0.5 -1.7 -0.8 -0.3 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on SEDLAC harmonization, using 2022-ENIGHNS. Actual data: 2022. Nowcast: 2023-2024. Forecasts are from 2025 to 2027. 2/ Projection using neutral distribution (2022) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. Macro Poverty Outlook / April 2025 41 This outlook reflects information available as of April 10, 2025. 1 2 NICARAGUA Population Poverty million millions living on less than $6.85/day 6.9 2.6 3 4 Life expectancy at birth School enrollment Nicaragua’s economy is estimated to have grown by years primary (% gross) 3.6 percent in 2024, driven by private consumption and services. Prudent fiscal and macroeconomic policies have 74.6 105.9 5 6 likely reduced public debt to 47.1 percent of GDP and GDP GDP per capita lowered inflation to 2.8 percent. Poverty fell to 12 percent current US$, billion current US$ in 2023, but challenges remain. Downside risks include a global slowdown, disruptions in trade and remittances, 18.8 2719.2 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2014 (2017 PPPs). 3/ 2022. and vulnerability to natural disasters. 4/ 2023. 5/ 2024. 6/ 2024. and education from 2017 to 2022, but not on a proxy of Key conditions and challenges household economic dependency (ratio of age 14+ house- hold members on employed members). Rural areas are be- Over the past three years, Nicaragua has sustained stable econom- hind urban ones on some dimensions, such as water, sani- ic growth at an average rate of 4 percent, driven by an unprece- tation and education. dented surge in remittances that has boosted private consump- tion, strong public and foreign direct investment, robust export Investing in human capital and infrastructure would enhance performance, as well as prudent macroeconomic and fiscal man- productivity in manufacturing and services and generate produc- agement. The sustained performance across these sectors has re- tive jobs. The economic impact of recent domestic legislative sulted in fiscal and current account surpluses, contributing signifi- changes, along with uncertainties in the global economic policy cantly to a reduction in public debt. environment, could impact trade, as well as domestic and foreign investment. However, Nicaragua’s solid international reserves, Nicaragua has made progress in reducing poverty incidence standing at an estimated US$6.2 billion in 2024, equivalent to 6.9 (US$3.65 per day 2017 PPP) reaching 12 percent in 2018. months of imports, bolster the country's capacity to respond to However, the triple shock of socio-political unrest in 2018, economic shocks. the pandemic, and hurricanes contributed to a renewed in- crease in the poverty rate to around 15 percent and a Gini index of around 48 in 2020. As the economy rebounded in Recent developments 2021, supported by public investment, export demand, and external aid pushing GDP above pre-crisis levels, it is likely Growth was mainly driven by construction, mining and robust that poverty rate restarted to fall (estimated at 13.1 percent services. Remittances are estimated to have increased from 26 in 2022). Data on basic needs (the only survey data avail- percent of GDP in 2023 to 27 percent in 2024, supporting private able post 2014) shows improvements in housing conditions consumption and partially compensating for the slowdown in net FIGURE 1 / Real GDP growth and contributions to real GDP growth FIGURE 2 / Actual and projected poverty rates and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 25 60 35000 20 50 30000 15 25000 10 40 5 20000 30 0 15000 -5 20 10000 -10 10 5000 -15 2000 2004 2008 2012 2016 2020 2024 0 0 Gov. cons. Exports GFCF 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 Inventories Private cons. Imports International poverty rate Lower middle-income pov. rate Statistical disc. GDP Upper middle-income pov. rate Real GDP pc Sources: World Bank staff elaboration based on data from World Bank, Ministry of Source: World Bank. Notes: See footnotes in table on the next page. Finance and Public Credit (MHCP), and Central Bank of Nicaragua. 42 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. external demand. The current account surplus narrowed from 7.7 percent of GDP in 2023 to 6.4 in 2024 percent due to a deterio- Outlook rating trade balance. Nicaragua is projected to grow at 3.4 percent in 2025 and 3.3 in 2026 Poverty is estimated to have declined to 11.5 percent in 2024 and 2027, as global economic deceleration and uncertainty limit ex- (US$3.65/day 2017 PPP), reflecting moderate economic growth and port opportunities and foreign investment. Remittances are expect- growth in remittances. The employment rate declined slightly in ed to moderate but continue supporting private consumption. 2024 (to 65.3 percent in December 2024 from 66.9 in December 2023), while the unemployment rate remained low, at 2 percent in Inflation is projected to settle at a higher rate of 4 percent in the December 2024 (Instituto Nacional de Información de Desarrollo). medium term, assuming higher global inflation. Poverty (US$3.65/ The employment rate for women (55.2 percent in December 2024) day 2017 PPP) is projected to be 11.4 percent in 2025 and decline has increased in recent years but remains well below that for men to 10.3 percent by 2027 as labor income grows. (77.1 percent). The current account surplus is expected to narrow to 1.8 percent Inflation halved from 5.6 percent in 2023 to 2.8 percent in 2024, by 2027 due to weaker external demand and trade policy shifts helped by moderately tight policy rates, a crawling peg exchange negatively impacting garment, commodity, and manufacturing ex- rate system, declining global prices, and subsidies. Banks re- ports. Conversely, lower crude oil prices will improve the balance mained well-capitalized, and credit and deposits continued to as the country is a net oil importer. Foreign direct investment flows grow. As of end-2024, capital adequacy and liquidity ratios for are forecast at around 5.4 percent of the GDP in the medium term. banks remained well above the regulatory minima. Bank deposits International reserves are projected to remain strong, ensuring ex- and credit to the private sector grew by 10.3 and 19.3 percent (y- change rate stability. o-y), respectively. Non-performing loans declined to 1.4 percent in December 2024, from 1.7 percent in December 2023 (Central Fiscal policy is expected to be prudent, with stable primary and Bank of Nicaragua). overall surpluses in the medium term, while public debt is project- ed to decline to 42.8 percent by 2027. Government expenditure rose due to increased capital spend- ing, narrowing the fiscal surplus from 2.6 percent of GDP in Downside risks to the macroeconomic outlook include global eco- 2023 to an estimated 2.1 percent in 2024. Sustained prudent nomic uncertainty, with potential impact on trade, remittances, fiscal policy and the current account surplus led to an estimat- and investment; weaker economic growth in key trading partners; ed decrease in public debt from 49.6 percent of GDP in 2023 the effects of legislative changes on investors’ sentiment; and vul- to 47.1 percent in 2024. nerability to natural disasters. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 3.8 4.6 3.6 3.4 3.3 3.3 Private consumption 6.0 7.3 3.9 3.0 2.8 2.8 Government consumption -6.5 -3.2 2.8 2.3 2.3 2.6 Gross fixed capital investment -3.0 20.3 5.1 3.9 5.1 6.3 Exports, goods and services 8.6 1.3 2.2 0.5 2.0 3.6 Imports, goods and services 5.0 8.9 3.3 1.0 4.1 3.9 Real GDP growth, at constant factor prices 3.8 4.6 3.6 3.4 3.3 3.3 Agriculture 1.7 -2.6 2.0 1.8 1.7 1.7 Industry 2.8 4.1 4.0 3.9 3.7 3.8 Services 4.7 6.7 3.8 3.6 3.6 3.4 Employment rate (% of working-age population, 15 years+) 62.1 62.5 62.5 62.5 62.5 62.5 Inflation (consumer price index) 10.5 5.6 2.8 3.5 4.0 4.0 Current account balance (% of GDP) -2.5 7.7 6.4 5.9 3.6 1.8 Net foreign direct investment inflow (% of GDP) 8.1 6.7 6.0 5.8 5.6 5.4 1 Fiscal balance (% of GDP) 0.6 2.6 2.1 1.4 1.4 1.4 Revenues (% of GDP) 31.7 31.7 32.0 31.3 31.3 31.6 2 Debt (% of GDP) 53.0 49.6 47.1 45.4 43.8 42.8 1 Primary balance (% of GDP) 2.0 4.2 3.7 3.1 3.0 3.0 3,4 International poverty rate ($2.15 in 2017 PPP) 5.8 5.2 5.0 4.9 4.6 4.4 3,4 Lower middle-income poverty rate ($3.65 in 2017 PPP) 13.1 12.0 11.5 11.4 10.9 10.3 3,4 Upper middle-income poverty rate ($6.85 in 2017 PPP) 36.1 32.9 31.8 31.4 31.0 30.2 GHG emissions growth (mtCO2e) 0.8 0.9 0.9 0.8 0.9 0.9 Source: World Bank, Ministry of Finance and Public Credit (MHCP) and Central Bank of Nicaragua. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Fiscal and Primary Balance correspond to the non-financial public sector. 2/ Debt is total public debt. It is adjusted for the pending relief for Non-Paris Club debt under the Heavily Indebted Poor Countries framework. 3/ Calculations based on SEDLAC harmonization, using 2014-EMNV. Actual data: 2014. Nowcast: 2015-2024. Forecasts are from 2025 to 2027. 4/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 43 This outlook reflects information available as of April 10, 2025. 1 2 PANAMA Population Poverty million millions living on less than $6.85/day 4.5 0.6 3 4 Life expectancy at birth School enrollment Growth is estimated at 2.9 percent in 2024, affected by the years primary (% gross) mining closure but supported by domestic demand. The fiscal deficit rose to 7.3 percent of GDP, driven by spending 76.8 94.6 5 6 pressures, arrear settlements, and the dissipation of one-off GDP GDP per capita revenues. With mixed results in the labor market and lower current US$, billion current US$ non-labor incomes, poverty and inequality increased. Growth is expected to accelerate, driven by a recovery in 86.2 19092.7 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2023 (2017 PPPs). 3/ 2022. construction and robust services. 4/ 2023. 5/ 2024. 6/ 2024. These efforts resulted in Panama's removal from the Inter- Key conditions and challenges national Financial Action Task Force’s list of jurisdictions in October 2023. Additionally, comprehensive reforms in Pub- Panama is a key logistical and financial hub in Central America lic-Private Partnerships and procurement have also helped thanks to its strategic location, the Panama Canal's role in global increase financing for critical infrastructure. trade, and a dollarized economy. Over the past 30 years, Pana- ma has experienced robust growth driven by capital and labor Despite high growth, poverty reduction, and reform progress, new accumulation, resulting in significant job creation and a sharp re- challenges have emerged. A legal dispute over the contract of duction in poverty (from 48.1 percent in 1991 to 12.9 percent in Panama’s largest mine, Cobre Panama, led to the suspension of all 2023 at $6.85/day per capita, 2017 PPP). Despite this progress, extraction activities. Additionally, recurrent droughts temporarily Panama remains one of the most unequal countries globally (Gi- reduced the number of vessels crossing the Panama Canal. These ni index of 48.9 in 2023), with high poverty rates persisting in events have impacted the economy and increased fiscal strain, giv- rural areas and among indigenous communities due to limited en Panama’s low tax revenues and new spending pressures. access to human capital and basic services and uneven labor market opportunities. Recent developments Panama continues to enhance its attractiveness as an off- shore center and has made significant progress in recent Growth is estimated to have decelerated to 2.9 percent in 2024, years to address challenges with anti-money laundering and impacted by the suspension of Cobre Panama activities. Govern- counter-terrorism financing (AML/CFT). Authorities have im- ment and private consumption, along with public investment (such plemented key reforms to improve governance and trans- as the metro line) and private ventures, helped mitigate a stronger parency, including updates to AML/CFT prevention regula- deceleration. The Economic Activity Index indicated a 3.5 percent tions and enhancements in beneficial ownership information. year-on-year growth in December-2024, showing signs of recovery FIGURE 1 / Real GDP growth and contributions to real GDP growth FIGURE 2 / Actual and projected poverty rates and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 40 25 25000 30 20 20 20000 10 15 15000 0 -10 10 10000 -20 -30 5 5000 -40 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 0 0 Gov. cons. Exports GFCF 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Inventories Private cons. Imports International poverty rate Lower middle-income pov. rate Statistical disc. GDP Upper middle-income pov. rate Real GDP pc Source: World Bank estimates based on data from the National Institute of Statistics Source: World Bank. Notes: See footnotes in table on the next page. and Census of Panama. 44 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. from the significant slowdown in the construction and mining ear- non-mining exports. Inflation is expected to stabilize at approx- lier in the year. Inflation decreased to -0.2 percent year-on-year in imately 1.5 percent in the medium term. However, limited agri- December-2024, supported by stable energy and food prices. cultural growth and the challenge of creating high-quality jobs, particularly in rural areas where 67.3 percent of the poor reside, Growth was accompanied by higher labor force participation but are likely to keep poverty levels around those of 2024 during limited gains in labor income among low-income households. Addi- the forecast period. tionally, the discontinuation of pandemic emergency transfers af- fected non-labor incomes. Consequently, the poverty rate ($6.85/ The current account deficit (CAD) is expected to widen in 2025, im- day per capita, 2017 PPP) rose by 0.7 percentage points to 13.6 per- pacted by slower growth in key trade partners but is projected to cent in 2024, and the Gini coefficient increased to 49.6 in 2024. gradually narrow thereafter. The CAD is anticipated to be largely fi- nanced by Panama’s robust FDI flows. The current account deficit (CAD) remained narrowed in 2024, im- ports slowed down faster than exports. Lower copper exports were Panama’s fiscal deficit is projected to decrease to 3.7 percent of partly offset by other merchandise and services exports, while im- GDP by 2027 due to fiscal consolidation efforts including cuts in ports declined from a high base in 2023. Foreign direct investment non-priority spending, better targeting of benefits, and improved (FDI surged by 69.7 percent by September 2024, mainly due to revenue collection. Additional fiscal reforms, particularly in rev- reinvested profits in the services sector. Panama's international re- enue mobilization, could further accelerate consolidation beyond serves are assessed as adequate. baseline projections. Public debt is expected to remain above his- torical levels, financed through a mix of global bonds, domestic The fiscal position worsened significantly in 2024, with the fiscal bonds, private creditors and international financial institutions. balance deficit reaching 7.3 percent of GDP. Revenues declined Despite recent rating pressures, Panama is expected to maintain as royalties from the copper mine and land sales to the Canal good access to financing, as its dollarization and stable political Authority waned. Spending increased due to election cycle pres- environment make it an attractive financial center. The country’s sures in the first half of the year and efforts to settle existing ar- domestic financial sector is also highly liquid. rears after the new administration came into office in July 2024. Consequently, public debt reached 61.5 percent of GDP by the Panama faces downsides risks from global trade uncertainties, end of 2024. tighter global financing conditions, and geopolitical tensions af- fecting prices. Domestically, fiscal pressures, uncertainty over the Cobre mine closure, and challenges in advancing the fiscal re- Outlook form agenda could slow down consolidation efforts and increase reliance on external debt. These risks may exacerbate poverty, Growth is projected to gradually accelerate to around 4.3 per- as 1 in 10 Panamanians are vulnerable to falling back poverty cent in 2027, driven by a dynamic services sector and increased due to a shock. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 10.8 7.4 2.9 3.5 3.8 4.3 Private consumption 6.7 3.0 3.0 3.7 3.9 4.3 Government consumption 2.9 3.4 3.2 3.5 4.3 4.2 Gross fixed capital investment 20.6 18.8 3.6 3.9 4.4 5.4 Exports, goods and services 22.3 5.1 3.5 3.5 4.1 4.7 Imports, goods and services 24.0 7.1 3.3 3.5 4.1 4.9 Real GDP growth, at constant factor prices 10.8 7.4 2.9 3.5 3.8 4.3 Agriculture 3.0 0.5 0.5 0.5 0.6 0.8 Industry 12.6 12.8 2.5 2.6 2.7 2.9 Services 10.4 5.7 3.2 3.9 4.4 4.9 Employment rate (% of working-age population, 15 years+) 56.4 58.2 58.1 58.2 58.3 58.4 Inflation (consumer price index) 2.9 1.5 1.5 1.5 1.5 1.5 Current account balance (% of GDP) 0.0 -3.2 1.9 -3.3 -2.6 -1.9 Net foreign direct investment inflow (% of GDP) 3.0 1.7 2.9 3.0 3.0 3.0 Fiscal balance (% of GDP) -4.0 -3.5 -7.3 -5.0 -3.9 -3.7 Revenues (% of GDP) 17.4 17.9 15.8 17.2 17.5 17.7 Debt (% of GDP) 58.0 56.4 61.5 61.8 61.6 61.5 Primary balance (% of GDP) -2.3 -1.4 -5.1 -2.7 -1.7 -1.5 1,2 International poverty rate ($2.15 in 2017 PPP) .. 1.3 0.9 0.9 1.0 1.0 1,2 Lower middle-income poverty rate ($3.65 in 2017 PPP) .. 4.4 4.1 4.4 4.8 4.3 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) .. 12.9 13.6 14.0 14.3 14.2 GHG emissions growth (mtCO2e) 9.8 8.1 5.3 4.5 3.7 2.9 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on SEDLAC harmonization, using 2023-EH. Actual data: 2023. Nowcast: 2024. Forecasts are from 2025 to 2027. 2/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 45 This outlook reflects information available as of April 10, 2025. 1 2 PARAGUAY Population Poverty million millions living on less than $6.85/day 6.4 1.2 3 4 Life expectancy at birth School enrollment Despite uneven rainfall which halved hydropower exports, years primary (% gross) Paraguay grew at an estimated 4.2 percent in 2024. Low inflation and healthy agriculture harvests helped to reduce 70.5 92.4 5 6 poverty to an estimated 16.2 percent. While growth is ex- GDP GDP per capita pected to average 3.6 percent over 2025-2027, Paraguay current US$, billion current US$ needs to create more and better jobs and strengthen its capacity to confront extreme weather shocks. 44.5 6978.1 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2023 (2017 PPPs). 3/ 2022. 4/ 2023. 5/ 2024. 6/ 2024. structural transformation, generating more formal employment Key conditions and challenges opportunities. While the recent investment grade rating should help to attract more private investment, efforts to strengthen the Thanks to a stable macroeconomic framework and an open trade rule of law and tackle corruption are still critical. and investment regime, Paraguay’s per capita income grew 2.8 per- cent annually on average over 2003-2023, faster than other region- al and upper middle-income peers. Recent developments Nonetheless, 18 percent of the population lived under the poverty Real GDP growth decelerated to 4.2 percent year-on-year in 2024 line of US$6.85 per day (2017 PPP) in 2023. External shocks, includ- from a high base in 2023. Uneven rainfall along the main water- ing droughts and floods, have slowed growth and poverty reduc- ways cut hydropower output by 20 percent and reduced overall tion since 2013. Income inequality remains high at 44.4 Gini points GDP growth by 0.5 percentage points over the same period. in 2023. Informal employment—affecting two-thirds of work- ers—constrains social mobility and economic security. The social The unemployment rate declined to 4.6 percent in Q4 2024, down protection system presents opportunities to strengthen coverage 0.7pp from a year earlier, mainly driven by gains among urban for these workers. male workers. However, underemployment rose by 0.3pp to 3.5 percent. Women’s workforce participation rose 1.3pp to 60.9 per- Creating better quality jobs is a priority, especially given Paraguay’s cent. Poverty is estimated to have fallen to 16.2 percent between young workforce. The government has advanced reforms to 2023 and 2024 (-1.8pp), supported by healthy agricultural harvests, streamline property registration, encourage the formalization of social transfers, and moderate increases in labor income. workers and of micro, small and medium-sized enterprises. Imple- menting these reforms and tackling gaps in infrastructure and hu- The current account deficit widened to 3.7 percent of GDP in man capital will help Paraguay boost productivity and accelerate 2024 as hydropower exports halved and global soy prices fell by FIGURE 1 / Annual hydropower exports FIGURE 2 / Actual and projected poverty rates and real GDP per capita Gigawatt hours Poverty rate (%) Real GDP per capita (constant million LCU) 45000 40 45 40000 35 40 35000 30 35 30000 30 25 25000 25 20 20000 20 15 15 15000 10 10 10000 5 5 5000 0 0 0 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Average 2020 2021 2022 2023 2024 International poverty rate Lower middle-income pov. rate 2014-2020 Upper middle-income pov. rate Real GDP pc Source: Central Bank of Paraguay. Source: World Bank. Notes: See footnotes in table on the next page. 46 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. 23 percent. The Guaraní depreciated against the US dollar by 6.5 consumer spending. Private investment growth is expected to percent in 2024. Net international reserves stood at 7.1 months pick up gradually as financing conditions ease over the medium of imports at end-March 2025. term, enabling moderate progress on a large pipeline of projects totaling around 10 percent of GDP. Headline inflation continued the downward trend seen since 2022, averaging 3.8 percent in 2024, but picked up to 4.4 percent at end- Inflation is expected to moderate to the midpoint of the target March 2025. Core inflation ticked up to 5.2 percent, towards the range in 2026 and 2027. Poverty is expected to decline from 16.2 upper end of the new target range (1.5-5.5 percent). The Central percent in 2024 to 15.6 percent in 2025 and to 14.8 percent in 2026, Bank maintained the policy rate at 6 percent. supported by rising incomes in services and agriculture. The 2024 fiscal deficit met the approved budget target of 2.6 per- The central government fiscal deficit is expected to continue nar- cent of GDP. Tax revenues exceeded expectations, reaching a rowing towards the legal limit of 1.5 percent of GDP in 2026. The record 11.4 percent of GDP. This performance reflected a rebound consolidation will be supported by lower public investment as a in corporate profits from the 2022 drought, as well as efficiency share of GDP and slightly higher revenues compared to pre-2024, improvements from the merger of tax and customs agencies. Real reflecting some permanent tax efficiency improvements. With a spending grew by only 0.9 percent as cuts in public investment off- smaller primary deficit and robust growth, public debt is expected set a 22.5 percent real increase in interest payments. to stabilize at around 40 percent of GDP. Public debt rose 2.3 pp to reach 40.7 percent of GDP as at The current account deficit is projected to narrow as agriculture end-2024. In February 2025, Paraguay issued a 10-year Guaraní- and hydropower exports recover and global oil prices fall. indexed bond for USD 600 million with an 8.5 percent coupon, in Nonetheless, the current account is expected to remain in a addition to a 30-year USD-denominated bond for an equivalent deficit as import growth, particularly of machinery and cap- amount at 6.65 percent. Paraguay’s sovereign spreads are among ital goods, picks up along with the gradual implementation the lowest in the region. of private investments. The outlook is subject to downside risks. Uncertainties in the global Outlook trade outlook and slower growth in China could dent Paraguay’s export performance, while tighter global financing conditions may Growth is forecast to decelerate further to 3.5 percent in 2025, augment external vulnerabilities (87 percent of Paraguay’s external reflecting the combined effects of a mild drought that is expected debt is denominated in foreign currency). Severe weather events to reduce the main soybean yield by 15 percent, and lower global could disrupt agricultural and hydropower production, and slow soybean prices. Over 2026-2027, growth is expected to remain poverty reduction. But, upside risks are also present, including near potential at 3.6 percent, driven by agriculture exports and faster progress on large private investment projects. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 0.2 5.0 4.2 3.5 3.6 3.6 Private consumption 2.3 3.2 5.2 3.5 3.5 3.5 Government consumption -2.2 5.1 7.1 0.0 0.2 1.2 Gross fixed capital investment -1.8 -2.8 8.3 2.7 4.3 4.8 Exports, goods and services -1.1 35.0 -2.0 3.7 4.2 4.2 Imports, goods and services 9.4 9.4 4.2 2.0 3.3 3.8 Real GDP growth, at constant factor prices 0.1 4.9 3.8 3.5 3.6 3.6 Agriculture -8.6 15.9 3.9 2.3 3.5 3.5 Industry 0.7 4.0 2.2 3.3 3.0 3.0 Services 1.5 3.5 4.8 4.0 4.0 4.0 Employment rate (% of working-age population, 15 years+) 61.3 62.3 62.2 63.4 64.8 64.0 Inflation (consumer price index) 9.8 4.6 3.8 3.8 3.5 3.5 Current account balance (% of GDP) -7.2 -0.6 -3.7 -1.8 -1.4 -1.1 Net foreign direct investment inflow (% of GDP) 1.9 0.8 0.8 1.2 1.5 1.5 Fiscal balance (% of GDP) -2.9 -4.1 -2.6 -1.9 -1.5 -1.5 Revenues (% of GDP) 14.0 14.0 15.1 15.0 14.7 14.6 Debt (% of GDP) 37.7 38.3 40.7 40.1 39.8 39.7 Primary balance (% of GDP) -2.0 -2.8 -0.9 -0.4 0.0 0.0 1,2 International poverty rate ($2.15 in 2017 PPP) 1.7 1.2 0.9 0.8 0.8 0.7 1,2 Lower middle-income poverty rate ($3.65 in 2017 PPP) 6.2 4.9 4.1 3.8 3.5 3.3 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) 20.6 18.0 16.2 15.6 14.8 14.0 GHG emissions growth (mtCO2e) -0.7 1.0 1.4 1.2 1.1 0.9 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on SEDLAC harmonization, using 2023-EPHC. Actual data: 2023. Nowcast: 2024. Forecasts are from 2025 to 2027. 2/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 47 This outlook reflects information available as of April 10, 2025. 1 2 PERU Population Poverty million millions living on less than $6.85/day 34.2 11.1 3 4 Life expectancy at birth School enrollment Economic growth is projected at 2.9 percent in 2025, sup- years primary (% gross) ported by high commodity prices and key infrastructure and mining projects. Poverty rates would fall to 30.5 percent in 73.4 107.5 5 6 2025 due to continued growth and stable prices. Risks in- GDP GDP per capita clude political uncertainty which could result in delays in fis- current US$, billion current US$ cal consolidation. Overcoming structural challenges related to low-productivity jobs and low-quality public services will 289.4 8458.4 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2023 (2017 PPPs). 3/ 2022. be critical for medium-term growth and poverty reduction. 4/ 2023. 5/ 2024. 6/ 2024. unrest. The recovery was driven by a strong expansion of public Key conditions and challenges investment and improved conditions in most sectors in the sec- ond half of the year. Private investment grew by 2.3 percent in Peru’s macroeconomic environment is characterized by low pub- 2024, as business confidence rebounded. Inflation returned to lic debt, ample international reserves, a credible Central Bank, the Central Bank's target and Congress's political decision to al- and a well-capitalized financial system. However, low growth and low withdrawals from private pension funds boosted consump- structural constraints limit formal job creation and the pace of tion by 2.8 percent in 2024. The labor market dynamics reflect- poverty reduction, while 70.9 percent of workers are informal. ed the economic recovery, with total employment growing by By 2024, almost one in three Peruvians subsisted on less than 1.8 percent in the Q4 2024, while private formal employment US$6.85 daily (2017 PPP). Over half of the population faced food expanded by 6.4 percent y-o-y. The unemployment rate fell to insecurity. Moreover, the economy is susceptible to commodi- 4.7 percent in the same quarter. Real wages increased by 3.4 ty price fluctuations and to climate shocks. To achieve higher percent in 2024, though they remain below pre-pandemic levels. growth, it is crucial to improve the quality of public services and Poverty declined by an estimated 1.4 percentage points, reach- infrastructure, governance, and the business environment, while ing 31.3 percent in 2024, still above pre-pandemic levels (28.8 ensuring political stability. Enhancing job quality, formal labor, percent in 2019). gender equality in the labor market, and social protection are key to inclusive growth. The fiscal deficit closed at 3.6 percent of GDP in 2024, exceeding the fiscal rule ceiling of 2.8 percent. The fiscal target was also missed in the recessionary context of 2023. Fiscal rule ceilings Recent developments have been increased or suspended six times in the last eight years. The deficit widened by 0.8 percentage points compared The Peruvian economy grew by 3.3 percent in 2024, recovering to 2023, driven mainly by a deterioration in fiscal revenues and from the 2023 recession driven by weather shocks and political higher public investment. Despite this temporary deterioration FIGURE 1 / Real GDP growth and contributions to real GDP growth FIGURE 2 / Actual and projected poverty rates and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 25 50 20000 20 45 18000 15 40 16000 10 35 14000 5 30 12000 0 25 10000 -5 20 8000 -10 15 6000 10 4000 -15 5 2000 -20 2019 2020 2021 2022 2023 2024e 2025f 2026f 2027f 0 0 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Private cons. Gov. cons. Gross investment International poverty rate Lower middle-income pov. rate Exports Imports GDP Upper middle-income pov. rate Real GDP pc Sources: Central Reserve Bank of Peru (BCRP), and World Bank staff calculations. Source: World Bank. Notes: See footnotes in table on the next page. 48 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. in the fiscal position, markets and rating agencies continue to will support growth throughout the forecast horizon. Poverty express confidence in the country's medium-term fiscal outlook. (US$6.85/day, 2017 PPP) is projected to decline to 29.9 percent by Public debt (32.7 percent of GDP as of 2024) and sovereign 2026 driven by economic growth and lower inflation. spreads (157 bp as of end-December 2024) are among the lowest in the region. A significant fiscal consolidation is expected in 2025, with the fiscal deficit projected to narrow from 3.6 percent in 2024 to Inflation reached 2.0 percent in December 2024, within the target 2.5 percent of GDP. Income tax regularization, boosted by high- range of 1-3 percent. Consequently, the Central Bank lowered its er commodity prices and mining profits, will significantly con- policy rate by 1.75 percentage points during 2024 reaching 5.0 tribute to revenue. The regularization in 2022, preceded by an percent in December. increase in copper and gold prices that is twice as large as that observed in 2024, raised tax revenues by 1.5 percentage The current account recorded a surplus of 2.2 percent of GDP in points of GDP. The 2025 budget reflects a restrained nominal 2024. Favorable international conditions, which led to a 10.4 per- increase of 4.5 percent, compared to a 12 percent rise in cent increase in the terms of trade, were the main drivers of the 2024. Fiscal consolidation would continue through 2026-27 improvement in the trade balance and current account compared at a slower pace. Public debt would remain at an average to 2023. The exchange rate remained stable, while net internation- of 32.5 percent of GDP in the medium term. Inflation is pro- al reserves reached 27.6 percent of GDP in December 2024 (13 jected to remain within the Central Bank's target range, and months of import cover). the current account balance would remain positive due to high commodity prices. Outlook In the second half of 2025, and especially before the 2026 pres- idential elections, political uncertainty may increase economic Growth is projected at 2.9 percent in 2025. High commodity prices volatility. Domestic risks include spending pressures in a pre-elec- by historical standards and continued positive business confi- toral year, affecting the fiscal rule's credibility. Climate change dence, which reached its highest level in six years in February, threats could impact medium-term growth. External risks include are expected to maintain the growth momentum throughout 2025. a global economic slowdown, a reversal of favorable commodity The opening and full operation of the port of Chancay, along with prices, and increasing trade policy uncertainty which could impact key mining projects (Zafranal, Reposicion Antamina or San Gabriel) investment and growth. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 2.8 -0.4 3.3 2.9 2.5 2.5 Private consumption 3.6 0.1 2.8 2.9 2.4 2.5 Government consumption -0.2 4.6 2.3 2.0 2.6 2.4 Gross fixed capital investment 0.7 -5.4 4.9 4.0 2.5 2.7 Exports, goods and services 5.2 4.9 5.1 4.0 3.3 3.2 Imports, goods and services 4.4 -1.3 6.9 5.1 3.8 3.9 Real GDP growth, at constant factor prices 2.9 -0.2 3.3 2.9 2.5 2.5 Agriculture 3.1 -3.9 4.1 2.8 2.4 2.5 Industry 1.5 -1.3 2.6 2.3 1.9 2.0 Services 3.7 0.9 3.7 3.3 2.8 2.8 Employment rate (% of working-age population, 15 years+) 71.6 69.1 69.3 69.4 69.7 70.2 Inflation (consumer price index) 8.5 3.2 2.0 2.2 2.0 2.0 Current account balance (% of GDP) -4.0 0.8 2.2 1.0 0.7 0.7 Net foreign direct investment inflow (% of GDP) 4.8 0.9 1.9 1.6 1.6 1.5 Fiscal balance (% of GDP) -1.7 -2.8 -3.6 -2.5 -1.9 -1.7 Revenues (% of GDP) 27.4 23.9 23.3 24.0 23.8 23.8 Debt (% of GDP) 33.9 32.9 32.7 32.6 32.4 32.4 Primary balance (% of GDP) -0.1 -1.1 -1.9 -0.7 -0.3 -0.1 1,2 International poverty rate ($2.15 in 2017 PPP) 2.7 3.2 3.2 2.8 2.7 2.6 1,2 Lower middle-income poverty rate ($3.65 in 2017 PPP) 9.5 10.3 9.8 9.2 8.9 8.6 1,2 Upper middle-income poverty rate ($6.85 in 2017 PPP) 32.2 32.7 31.3 30.5 29.9 29.5 GHG emissions growth (mtCO2e) 1.3 -1.2 0.1 0.2 0.1 0.2 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Calculations based on SEDLAC harmonization, using 2023-ENAHO. Actual data: 2023. Nowcast: 2024. Forecasts are from 2025 to 2027. 2/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 49 This outlook reflects information available as of April 10, 2025. 1 2 SAINT LUCIA Population Poverty thousand thousands living on less than $6.85/ day 179.7 14.7 3 4 Saint Lucia's economy has stabilized post-pandemic but Life expectancy at birth School enrollment years primary (% gross) remains at risk from natural disasters and escalating geopolitical tensions. Economic growth is estimated to have 71.3 100.7 accelerated to 3.7 percent in 2024, contributing to poverty 5 6 reduction. Nonetheless, high public debt inherited from the GDP GDP per capita current US$, billion current US$ pandemic limits development funding. Structural reforms are necessary to build fiscal buffers, address informality, strength- 2.6 14202.5 en the financial system, and enhance poverty reduction. Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2015 (2017 PPPs). 3/ 2022. 4/ 2023. 5/ 2024. 6/ 2024. Despite a stable financial sector, bank lending remains slow Key conditions and challenges due to high sovereign risk and stagnant efforts in reducing non-performing loans. The Co-operative Societies Act strength- Saint Lucia is a small open economy that is heavily reliant ened the regulatory framework for the growing credit union on tourism, with high levels of debt, and volatile economic sector. However, the lack of foreclosure legislation makes the growth, averaging 1.3 percent between 2010 and 2019. Fre- bank mortgage lending riskier and effectively uncollateralized. quent natural disasters, climate change, and vulnerability The pegged exchange rate under the Eastern Caribbean Cur- to global geopolitical tensions cause significant economic rency Union and its sound monetary policies help to ensure and social losses. To mitigate these impacts, it is critical to price stability. strengthen resilience through fiscal buffers and adequate do- mestic resource mobilization. Recent developments In 2015, fewer than 1 in 10 Saint Lucians were considered poor (US$6.85/day, 2017 PPP). Inequality was high, with a Gini in- Real GDP growth reached 2.2 percent in 2023 and accelerated dex above 40. Monetary poverty is estimated to have declined to 3.7 percent in 2024 driven by a fully recovered tourism sector slowly in the subsequent years but surged during the pandem- and robust construction activity. From January to August, stay- ic and was aggravated by high food and fuel prices. Recent over arrivals increased by 18 percent in 2024 compared to the census data indicates improvements in non-monetary pover- same period in 2023, and by 3.4 percent over 2019 levels, driven ty: the share of households without toilet facilities decreased by an increase in arrivals from the United States and hosting of from 6.2 percent in 2010 to 1.9 percent in 2022 and house- the Cricket World Cup. The construction sector was fueled by in- holds with internet access increased from 26.5 percent to vestments in public and private infrastructure projects. The eco- 89.1 percent. nomic recovery helped reduce the official unemployment rate FIGURE 1 / Key macroeconomic variables FIGURE 2 / Actual and projected poverty rates and real GDP per capita Percent Percent Poverty rate (%) Real GDP per capita (constant LCU) 25 100 12 40000 20 90 35000 15 80 10 30000 10 70 8 5 60 25000 0 50 6 20000 -5 40 15000 -10 30 4 10000 -15 20 2 -20 10 5000 -25 0 0 0 2022 2023 2024e 2025f 2026f 2027f 2015 2017 2019 2021 2023 2025 2027 PPG debt-to-GDP (rhs) Primary balance (% of GDP) International poverty rate Lower middle-income pov. rate Real GDP growth Upper middle-income pov. rate Real GDP pc Source: World Bank staff calculations. Source: World Bank. Notes: See footnotes in table on the next page. 50 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. from 16.3 percent in Q1 2023 to 11.3 percent in Q2 2024, despite the recent introduction of a minimum wage, and is expected to Outlook reduce poverty. Real output growth is projected to gradually moderate over the The external balance improved due to the recovery in tourism, low- medium term, as tourism demand stabilizes at pre-pandemic levels er fuel prices, and stable remittances. Foreign direct investment is and air-travel capacity constraints emerge. Investments in major estimated around 7.4 percent of GDP in 2024, helping to fund the construction projects, including several major hotels and roads, are current account deficit, which decreased to 1.3 percent in 2024. Im- expected to peak in 2025 and 2026. Agriculture is likely to slow puted international reserves covered approximately 3.4 months of down due to unfavorable weather conditions. Poverty is projected imports at the end of 2024. to continue declining in the medium term. Inflation is expected to stabilize at its equilibrium point of 2.0 percent in 2027. Favorable global supply developments, tighter monetary policy, and lower energy and food prices reduced inflation from 6.4 per- Primary surpluses are expected over the medium term. The rev- cent in 2022 to 1.3 percent in 2024. The pressure on food security, enue-to-GDP ratio is anticipated to remain stable at 2023 levels, previously worsened by the pandemic and food price shocks, is while total spending is projected to increase, driven by capital ex- now easing. The financial sector remains liquid and profitable. penditures peaking in FY25/26 and FY26/27. Public debt is projected to remain stable at around 74 percent of GDP, above the regional tar- Since 2022, the primary fiscal balance has been positive, con- get of 60 percent of GDP by 2035. The current account deficit is ex- sistent with the country’s pre-pandemic track record. Recent pected to improve gradually as the recovery in tourism offsets the tax policy reforms, including a health and citizen security levy trade deficit from imports of construction materials, fuel, and food. and an increase in cigarette excise tax, along with the robust performance of the tourism sector, boosted annual revenues. The risks to the outlook are skewed to the downside, including po- On the expenditure side, a slowdown in post-pandemic spend- tential delays in fiscal consolidation, escalating global geopolitical ing on goods and services and capital spending, especially in tensions, economic slowdowns in key tourist-origin countries, re- 2024, reduced total spending. Public debt has improved sig- duced foreign direct investment, fewer revenues for the Citizen- nificantly since 2020 thanks to high nominal GDP growth and ship-by-Investment Program, lower remittances, natural disasters, fiscal improvements. and the impacts of climate change. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 20.4 2.2 3.7 2.8 2.3 1.9 Real GDP growth, at constant factor prices 19.7 2.1 3.7 2.8 2.3 1.9 Agriculture 4.4 -16.9 9.2 4.0 3.1 3.1 Industry 1.8 12.4 12.5 4.5 1.5 2.6 Services 23.5 0.9 2.1 2.4 2.4 1.8 Inflation (consumer price index) 6.4 4.1 1.3 1.6 1.8 2.0 Current account balance (% of GDP) -3.6 -1.6 -1.3 -1.0 -0.8 -0.6 1 Fiscal balance (% of GDP) -1.9 -2.0 -0.5 -2.3 -2.7 -2.2 1 Revenues (% of GDP) 20.9 21.8 22.3 22.0 21.9 22.1 1,2 Debt (% of GDP) 74.1 75.5 73.9 73.7 73.6 73.4 1 Primary balance (% of GDP) 1.0 1.4 2.7 1.3 0.9 1.4 3,4 International poverty rate ($2.15 in 2017 PPP) 0.0 0.0 0.0 0.0 0.0 0.0 3,4 Lower middle-income poverty rate ($3.65 in 2017 PPP) 0.4 0.4 0.4 0.3 0.3 0.3 3,4 Upper middle-income poverty rate ($6.85 in 2017 PPP) 7.8 7.4 7.2 6.8 6.2 6.2 GHG emissions growth (mtCO2e) 3.9 2.0 2.4 2.2 1.9 1.3 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Fiscal balances are reported in fiscal years (April 1st -March 31st). 2/ Public debt includes payables and overdrafts/Eastern Caribbean Central Bank advances. 3/ Calculations based on CONLAC harmonization, using 2015-SLCHBS. Poverty estimates and projections not comparable to pre-2024 MPOs due to methodological changes. For details, see March/April 2024 Update to the Poverty and Inequality Platform (PIP) at https://pip. worldbank. org/publication. Actual data: 2015. Estimates: 2016-2024. Forecasts: 2025-2027. 4/ Projection using neutral distribution (2015) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU. Macro Poverty Outlook / April 2025 51 This outlook reflects information available as of April 10, 2025. ST. VINCENT AND 1 Population Poverty thousand 100.6 .. THE GRENADINES Life expectancy at birth years 2 School enrollment 3 primary (% gross) Despite Hurricane Beryl's damages that slowed growth to 69.0 109.7 4 5 an estimated 4.5 percent of GDP in 2024, economic activity GDP GDP per capita current US$, billion current US$ remained relatively strong, driven by tourism, agricultural recovery, and infrastructure projects. The fiscal deficit is 1.2 11546.7 expected to rise only temporarily as spending is controlled, Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2022. 3/ 2023. 4/ 2024. 5/ 2024. reducing the debt burden. New tourism infrastructure is ex- pected to boost growth and jobs, but potential risks from ex- ternal uncertainties and natural disasters cloud the outlook. from 2008, 30.2 percent of the population lived below the nation- Key conditions and challenges al poverty line, but economic growth in subsequent years should have contributed to a decline in poverty. Saint Vincent and the Grenadines is a small island developing state highly integrated into the global economy and vulnerable to exter- nal economic shocks and natural disasters. The economy is primar- Recent developments ily driven by tourism, agriculture, and construction. Ongoing invest- ments in infrastructure—such as a new port, an international airport, Real GDP growth is estimated to have slowed to 4.5 percent in roads, hotels, a hospital, water supply, and digitalization—support 2024, due to the impact of Hurricane Beryl, which caused losses growth and foster economic diversification. The country aims to di- and damages estimated at US$230.6 million (22 percent of 2023 versify its economy through high-end tourism, international finan- GDP). Agriculture has been recovering slowly but remains hindered cial services, agricultural processing, light manufacturing, renew- by persistent droughts and the lasting impacts of the hurricane, able energy, and information and communication technologies. disproportionally affecting the poor and increasing food insecurity. Inflation eased to 3.5 percent in 2024 due to lower global commod- The fiscal balance deteriorated due to the pandemic and the vol- ity prices, helping mitigate food security concerns. canic eruption in April 2021, compounded by Hurricane Beryl in July 2024, which caused significant damage to infrastructure and The fiscal deficit is expected to have widened to 12.9 percent livelihoods, leading to an increase in public debt. The main chal- of GDP in 2024 amid faster project execution and hurricane-re- lenge is to reduce fiscal deficits while directing limited resources to- lated spending. Revenues increased primarily due to a pension ward recovery and high-priority public investment projects. There reform and adjustments in user and license fees. The primary is no up-to-date poverty data available. According to the latest data deficit widened to 9.7 percent of GDP as fiscal rule targets were FIGURE 1 / Real GDP growth and sectoral contributions to real FIGURE 2 / Public debt GDP growth Percent, percentage points Percent of GDP 8 100 90 6 80 4 70 2 60 0 50 -2 40 30 -4 20 -6 10 2017 2018 2019 2020 2021 2022 2023 2024e 2025f 2026f 2027f 0 Agriculture Industry 2017 2018 2019 2020 2021 2022 2023 2024e 2025f 2026f 2027f Services Net taxes GDP at market prices Public debt Public external debt Sources: Ministry of Finance and World Bank staff calculations. Sources: Ministry of Finance and World Bank staff calculations. 52 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. suspended to ensure appropriate crisis response, contributing to converge to around 2.8 percent thereafter. Tourism is expected to a 3 percentage points increase in the debt-to-GDP ratio to 91.1 continue expanding, supported by the new airport and Sandals Re- percent of GDP. Government gross financing needs reached 12.9 sort. Inflation is projected to slow to 2.6 percent in 2025 amid more percent of GDP in 2024, covered mainly by official external fi- favorable global commodity prices but remain above the 2.0 per- nancing and supplemented by domestic bond issuances. cent target. Poverty is expected to continue declining. The current account deficit (CAD) is estimated to have widened The fiscal deficit is expected to decrease over the forecast period, to 20.1 percent of GDP in 2024 due to higher imports related to turning into a surplus of 0.4 percent of GDP in 2027. Public in- major capital investment. The worsening trade deficit was partial- vestment is projected to decline from 11.1 percent of GDP in ly offset by higher exports of services resulting from greater stay- 2025 to 6 percent of GDP in 2027 as investment projects and over arrivals associated with the opening of the Sandals Resort. Hurricane Beryl reconstruction activities conclude. During this The CAD was mainly financed by foreign direct investment and ex- time, capital expenditure on health, education and other essen- ternal borrowing on concessional terms. International reserves are tial services will be prioritized, and current spending will be re- adequate, estimated at around 5 months of imports in 2024. The strained. Consequently, the public debt is projected to decline to financial system remains sound with adequate capital and liquidity 87.6 percent of GDP by 2027. Realigning with fiscal rule is crucial buffers. Uptake for loan moratorium offered to those affected by for debt sustainability. Hurricane Beryl was minimal, and non-performing loans continued to decline in the 2024Q3. Lower imports following the completion of large capital projects and higher service exports driven by improved tourism infrastruc- ture will help reduce the CAD to 9.5 percent of GDP by 2027. Outlook This outlook is subject to downside risks, including uncertain Growth is expected to accelerate to 4.9 percent in 2025, driven by global economic conditions, a changing trade outlook, and reconstruction activities and large infrastructure investments, and natural disasters. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 5.0 5.8 4.5 4.9 2.9 2.7 Real GDP growth, at constant factor prices 5.4 5.0 4.5 4.9 2.9 2.7 Agriculture -6.2 -2.9 -0.3 2.0 2.0 2.0 Industry 7.9 3.9 3.5 2.2 2.1 2.1 Services 5.7 5.8 5.0 5.7 3.1 2.8 Inflation (consumer price index) 5.7 4.6 3.5 2.6 2.1 2.1 Current account balance (% of GDP) -20.6 -16.8 -20.1 -13.9 -10.8 -9.5 1 Fiscal balance (% of GDP) -9.4 -11.9 -12.9 -7.9 -0.5 0.4 Revenues (% of GDP) 27.3 27.0 28.3 28.7 28.7 28.7 1 Debt (% of GDP) 86.2 88.0 91.1 93.7 90.4 87.6 1 Primary balance (% of GDP) -7.0 -9.3 -9.7 -4.6 2.4 3.0 2 GHG emissions growth (mtCO2e) 5.6 2.8 1.5 0.5 0.5 0.9 Source: Ministry of Finance and World Bank staff calculations. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Budget balances and public debt are for the central government. 2/ Emissions data sourced from CAIT and OECD. Macro Poverty Outlook / April 2025 53 This outlook reflects information available as of April 10, 2025. 1 2 SURINAME Population Poverty million millions living on less than $6.85/day 0.6 0.1 3 4 Life expectancy at birth School enrollment Suriname’s economy has stabilized under a program to years primary (% gross) restructure debt, modernize monetary and exchange rate policies, and address financial sector vulnerabilities. Rapid 70.3 66.0 5 6 growth is expected over the medium term as a result of a GDP GDP per capita major offshore oil investment. Managing this economic current US$, billion current US$ transition will require prudent fiscal policy to reduce debt, and continued investment in human development to 4.8 7512.3 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2022 (2017 PPPs). 3/ 2022. support poverty reduction and shared prosperity. 4/ 2023. 5/ 2024. 6/ 2024. Recent discoveries of several offshore oil deposits have improved Key conditions and challenges Suriname’s medium-term economic prospects. A final investment decision was announced in October 2024, with production expect- Fiscal, monetary, and financial sector indicators have improved, ed to start in 2028. Significant equipment imports are expected, supported by an IMF program which concluded in March 2025 financed by foreign direct investment. Ensuring that economic ahead of May 2025 elections. Debt restructuring, subsidy reform, growth is inclusive requires strengthening the governance and in- and improved tax policies have supported fiscal consolidation stitutional framework to enhance fiscal management, deliver pub- and improved debt sustainability. Tighter monetary policy has lic services, and implement climate change adaptation measures. helped contain inflation, while exchange rate flexibility support- ed foreign exchange reserve accumulation. Reducing financial sector vulnerabilities relies on the completion of a program of Recent developments ongoing reforms. Growth accelerated to an estimated 2.8 percent in 2024, up from Approximately 17.5 percent of the population lived below the up- 2.5 percent in 2023. Services led the expansion, followed by in- per middle-income poverty line of US$6.85 (2017 PPP) per day dustry, as inflation moderated. Agriculture lagged as a result of an in 2022 (the latest measurement) with 46.5 percent in multidi- ongoing drought. Inflation slowed to 10.1 percent by December mensional poverty. Monetary and multidimensional poverty are 2024, from 32.6 percent (y-o-y) one year earlier. Estimated mon- markedly higher in the country’s interior. Reforms to strengthen etary poverty continued to decline as a result. However, the pro- social protection, education, and female labor force participation longed drought in the interior of the country has limited access to will be key to accelerate poverty reduction. Suriname is exposed to clean water and worsened food insecurity. natural disaster hazards due to irregular precipitation (floods and droughts) and water management is a high priority, especially in Higher imports, led by capital goods to support investment, nar- the more vulnerable interior. rowed the current account surplus to 0.2 percent of GDP in 2024, FIGURE 1 / Budget balance FIGURE 2 / Actual and projected poverty rates and real GDP per capita Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 5 20 27500 18 27000 0 16 26500 14 26000 12 25500 -5 10 25000 8 24500 -10 6 24000 4 23500 -15 2 23000 0 22500 2022 2023 2024 2025 2026 2027 -20 International poverty rate Lower middle-income pov. rate 2012 2015 2018 2021 2024 2027 Upper middle-income pov. rate Real GDP pc Source: Ministry of Finance and Planning in Suriname. Source: World Bank. Notes: See footnotes in table on the next page. 54 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. down from 4.0 percent of GDP in 2023. The overall balance of The fiscal deficit is projected to narrow, supported by a broader payments surplus is estimated at 6.1 percent of GDP in 2024, in- VAT tax base, fuel taxes, and non-tax revenues supported by lease cluding errors and omissions. Gross international reserves accu- rates and fees. Subsidy expenditure is expected to decline due to mulated to an estimated 7.6 months of imports in 2024, up from electricity and gas price adjustments. Fiscal consolidation will cre- 7.3 months in 2023. ate space to scale up social spending and growth-enhancing in- frastructure investments. The debt-to-GDP ratio will remain on a Fiscal policy focused on debt sustainability, improving the quality of declining path as GDP growth accelerates and the exchange rate public spending, and social assistance programs to protect the vul- strengthens. Over the medium term, public investment in oil in- nerable. However, the primary surplus fell to an estimated 0.3 per- frastructure is expected to modestly increase the fiscal deficit. The cent of GDP in 2024, missing a 2.5 percent of GDP target under an current account will move into a significant deficit as oil-related IMF program. Weak non-tax revenues, persistent electricity subsi- capital imports rise, financed by foreign direct investment. dies, and a rising wage bill contributed to this fiscal outturn, as well as the cost of a temporary cash transfer program to mitigate the The government aims to expand coverage of permanent social as- impact of higher energy prices on the vulnerable. Debt restructur- sistance programs, introduce digital payments, and regularly up- ing negotiations with most official and private creditors are near- date payment amounts in line with inflation. These reforms have ing completion, and Moody’s upgraded its sovereign debt rating to the potential to ensure more effective and efficient social support Caa1 in October 2024. to those most in need. Decisions on whether and in what form to maintain a large-scale temporary cash transfer program to offset rising costs of living still need to be made. Outlook The outlook is subject to upside and downside risks. New invest- Real GDP growth is projected to accelerate to 3.1 percent ments in bauxite production could increase exports and govern- in 2025, supported by private investment in preparation for ment revenues over the medium term. However, oil price volatil- oil production. Investment-led growth is expected to contin- ity may affect the pace of ongoing investments in offshore pro- ue over the medium term, with rapid expansion expected duction, and emerging trade policies in key partner countries may after oil production begins in 2028. Inflation is anticipated to limit the growth of non-oil exports. A robust institutional and fis- decelerate through 2027, supported by restrictive monetary cal framework, accompanied by investments in human capital, and fiscal policy. Driven by economic growth and lower in- will be essential to manage future extractive revenues in an ef- flation, poverty is projected to decline by up to a percentage ficient and equitable manner, enhance non-oil competitiveness, point (y-o-y) in 2025. and mitigate environmental impacts. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 2.4 2.5 2.8 3.1 3.3 3.5 Real GDP growth, at constant factor prices 2.4 2.5 2.9 3.1 3.3 3.5 Agriculture -3.9 -1.8 2.4 2.6 2.5 2.4 Industry 2.5 2.1 2.9 3.0 3.5 3.5 Services 3.1 3.2 2.9 3.2 3.3 3.6 Inflation (consumer price index) 52.4 51.6 16.2 11.2 8.5 7.4 Current account balance (% of GDP) 2.0 4.3 0.2 -23.5 -29.1 -37.8 Net foreign direct investment inflow (% of GDP) 0.1 -1.8 -0.6 21.1 27.1 36.1 1 Fiscal balance (% of GDP) -0.9 -1.9 -2.5 -3.1 -1.6 -1.3 Revenues (% of GDP) 26.0 27.6 25.2 27.0 27.8 28.0 1 Debt (% of GDP) 76.7 97.6 69.7 63.0 56.7 51.5 1 Primary balance (% of GDP) 0.8 1.4 0.3 -0.4 0.6 0.8 2,3 International poverty rate ($2.15 in 2017 PPP) 1.1 1.1 1.1 1.1 0.8 0.7 2,3 Lower middle-income poverty rate ($3.65 in 2017 PPP) 4.2 4.2 4.0 3.8 3.5 3.4 2,3 Upper middle-income poverty rate ($6.85 in 2017 PPP) 17.5 17.5 17.3 16.5 16.0 15.2 GHG emissions growth (mtCO2e) 1.2 1.2 1.6 1.5 1.7 1.8 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Budget balances and public debt are for the central government, with debt based on SDMO data. 2/ Calculations based on CONLAC harmonization, using 2022-SSLC. Actual data: 2022. Nowcast: 2023-2024. Forecasts are from 2025 to 2027. 3/ Projection using neutral distribution (2022) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU. Macro Poverty Outlook / April 2025 55 This outlook reflects information available as of April 10, 2025. TRINIDAD AND 1 Population Poverty million 1.4 .. TOBAGO Life expectancy at birth years 2 School enrollment primary (% gross) 3 Trinidad and Tobago's economy is characterized by relatively 74.7 92.8 4 5 strong human development and financial buffers, yet remains GDP GDP per capita current US$, billion current US$ reliant on the energy sector, which employs a small workforce. Recently, fiscal accounts worsened due to declining energy 26.3 19176.3 revenues. Increased oil and gas production is expected to Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2022. 3/ 2023. 4/ 2024. 5/ 2024. improve GDP growth in 2025, but risks include global eco- nomic slowdowns and trade policy uncertainties. Labor market challenges persist, with notable gender disparities. Key conditions and challenges The economy is supported by significant reserves and the Heritage and Stabilization Fund, which buffer against economic shocks. Trinidad and Tobago exhibits several economic These reserves, along with political stability, have helped stabilize strengths, including solid human development and ro- the economy during periods of fluctuating oil and gas prices, cru- bust financial buffers. The country's human capital indi- cial for the nation's fiscal health. Prudent management of natural cators compare favorably to those of the rest of Latin resource revenues and a focus on diversifying the economic base America and the Caribbean (LAC) supported by substan- are essential for advancing economic development. tial government investments that foster a knowledge- based economy, essential for adapting to globalization Recent data on poverty and inequality are not available. Trinidad and technological advancements. and Tobago’s Human Development Index (HDI), aligns with its status as a high-income country, driven by favorable life ex- However, Trinidad and Tobago’s economy remains heavily pectancy at birth (74.7 years) and mean years of schooling (11.7 dependent on the energy sector, which accounts for only years), both exceeding regional averages. The performance of 2.0 percent of employment, but over one-third of GDP and schoolchildren in standardized tests also exceeds regional aver- over two-thirds of exports. This reliance makes the coun- ages, but lags OECD countries. Notable gaps between women try vulnerable to global energy price fluctuations and pro- and men remain; despite comparatively strong academic perfor- duction disruptions. To balance its maturing energy sec- mance, women’s labor force participation (46.9 percent) lags that tor with the shift toward a low-carbon economy, efforts of men by 16.4 percentage points. Additionally, the adolescent are underway to reduce greenhouse gas emissions and in- fertility rate, although below the LAC average, is high compared crease renewable energy use. to other high-income countries. FIGURE 1 / Real GDP growth and sectoral contributions to real FIGURE 2 / Fiscal balance and public debt GDP growth Percent, percentage points Percent of GDP Percent of GDP 4 70 6 3 60 4 2 2 50 1 0 40 0 -2 30 -1 -4 20 -2 -6 -3 10 -8 2021 2022 2023 2024e 2025f 2026f 2027f 0 -10 Agriculture Industry 2021 2022 2023 2024e 2025f 2026f 2027f Services Net taxes on production Real GDP growth Debt (lhs) Fiscal balance Primary balance Source: World Bank. Source: World Bank. 56 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. The government is committed to attracting investment, pro- The financial system remains robust and stable. Banks maintain moting private sector engagement, and increasing trade inte- capital levels well above the regulatory minimum, and non-per- gration to foster diversification. Advancing structural reforms forming loans (NPLs) remained steady at around 3 percent in to enhance the business environment, improve trade logistics, 2024. The insurance sector continues to be well-capitalized, liq- and tackle insecurity is crucial for fostering private sector uid, and profitable. growth and economic diversification. Improving governance, in- frastructure, and public service delivery are essential for creat- Labor market outcomes deteriorated in 2024. Unemployment ing a conducive environment. increased by 0.9 percentage points year-on-year, to 4.1 percent in the third quarter of 2024. The labor force participation rate declined by 0.5 percentage point to 55.1 percent. The deteri- Recent developments oration was most pronounced among men. Their labor force participation rate declined by 0.7 percentage points to 63.3 In 2024, Trinidad and Tobago’s GDP growth was estimated at 1.7 percent and their unemployment rate increased by 1.6 per- percent up from to 1.4 percent in 2023, driven by the non-ener- centage points to 4.2 percent. gy sector. The energy sector is estimated to have contracted by 2.1 percent, due to low global energy prices and weaker produc- tion. The economy’s slow recovery from the pandemic continues Outlook to rely on the non-energy sector, particularly services. Average annual inflation declined to 0.5 percent in 2024, down from 4.6 GDP growth is expected to rise to 2.8 percent in 2025 and average percent in 2023. 2.5 percent in the medium term, driven by oil production increases. Two developing natural gas projects are scheduled to become op- Fiscal accounts worsened in FY2024, with the primary balance shift- erational by 2027, further boosting the energy sector. Inflation is ing from a 1.5 percent of GDP surplus in FY2023 to a 1.4 percent expected to gradually increase, converging toward 2 percent. The deficit. The overall deficit reached 5.0 percent of GDP, up from 1.8 overall fiscal deficit is expected to remain below 3.0 percent of GDP percent in 2023. The deterioration can be attributed to a loss in in 2025 and 2026 due to subdued energy sector revenues, before revenue of 8.2 percent of GDP from the energy sector, only part- improving in 2027 due to the completion of investment projects. ly offset by a 3.6 percent increase for the non-energy sector. Total The current account surplus will moderately increase, and public expenditures slightly decreased to 31.8 percent of GDP from 32.7 debt as a percentage of GDP will remain above 50 percent during percent in 2023. the projection period. The current account surplus narrowed to 5.8 percent of GDP as a Risks to the outlook remain tilted to the downside. A more severe result of a drop in the goods and services balance and in the in- slowdown in global economic activity could push oil prices down, come account. Supported by the Heritage and Stabilization Fund, and unexpected disruptions could lower oil production. Increasing net international reserves remained adequate at US$ 5.8bn (or 7.5 trade policy uncertainty poses threats to Trinidad and Tobago’s months of imports) at the end of 2024. main export products. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 1.1 1.4 1.7 2.8 1.3 3.2 Real GDP growth, at constant factor prices 3.2 0.1 1.7 2.8 1.3 3.2 Agriculture -13.2 -5.8 1.8 0.3 4.1 2.3 Industry 2.4 -4.7 -0.4 2.9 -0.1 3.3 Services 4.1 3.9 3.1 2.9 2.3 3.2 Inflation (consumer price index) 5.8 4.6 0.5 1.4 1.8 1.9 Current account balance (% of GDP) 18.4 13.3 5.8 6.7 6.3 6.3 Net foreign direct investment inflow (% of GDP) -7.3 -8.1 -2.9 -2.9 -2.8 -2.7 1 Fiscal balance (% of GDP) 0.7 -1.8 -5.0 -2.9 -3.6 -2.1 Revenues (% of GDP) 29.4 30.9 26.7 30.0 27.8 27.4 1 Debt (% of GDP) 53.0 59.3 56.7 55.9 54.8 52.4 1 Primary balance (% of GDP) 3.4 1.5 -1.4 0.8 0.0 1.6 GHG emissions growth (mtCO2e) -1.2 -1.2 0.1 0.6 -0.2 -0.3 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Budget balances and public debt are for the central government. Macro Poverty Outlook / April 2025 57 This outlook reflects information available as of April 10, 2025. 1 2 URUGUAY Population Poverty million millions living on less than $6.85/day 3.5 0.2 3 4 Life expectancy at birth School enrollment In 2024, Uruguay’s economy rebounded from 2023's years primary (% gross) drought-induced recession, bolstered by higher soy and cellulose production. Buoyed by strong growth and faster 78.0 108.8 5 6 disinflation, real average household incomes increased by 3 GDP GDP per capita percent, prompting poverty to fall to an estimated 6 percent. current US$, billion current US$ Growth is expected to moderate towards its potential over the medium term, averaging 2.2 percent over 2025-2027. 81.0 23087.1 Sources: WDI, MFMod, and official data. 1/ 2024. 2/ 2023 (2017 PPPs). 3/ 2022. Risks to the outlook remain tilted to the downside. 4/ 2022. 5/ 2024. 6/ 2024. to enhance human capital and trade integration, dynamize labor Key conditions and challenges markets and boost competition and productivity. Continuing to strengthen fiscal buffers is also important so that Uruguay can ef- Annual average growth slowed from 3.7 percent between 2002 fectively address external shocks, including climate-related ones. and 2015 to just 1.0 percent between 2016 and 2023. The slow- down reflected external factors such as lower commodity prices, the COVID-19 pandemic, slower growth of trading partners, along Recent developments with extreme weather events, but shortcomings in human capital and productivity also hinder faster growth. The economy grew by 3.1 percent in 2024, rebounding from the severe drought in 2023. Exports drove the recovery, reflecting the Uruguay has Latin America’s largest middle class and highest per normalization of soybean production and a 22 percent increase in capita income, and poverty is low relative to the region at 6.7 cellulose exports from new milling capacity. On the supply side, percent in 2023 (using the international poverty line of US$6.85 growth was mainly driven by the agriculture and industrial sectors, per day, 2017 PPP). Nonetheless, poverty rates are twice as high reflecting a normalization of hydropower generation and the re- among children and the Afro-descendant population, and income sumption of operations at the ANCAP (Administración Nacional de inequality remains high at about 40.9 points. There are persistent Combustibles, Alcohol y Portland) oil refinery. regional disparities in poverty and access to good quality jobs. Informality is higher among Afro-Uruguayans (30 percent) and in The current account deficit narrowed from 3.4 percent of GDP in the northeastern departments (39-49 percent) than the national 2023 to 1.0 percent in 2024. This reflected the large improvement average (22.7 percent). in the trade balance, driven by agriculture and cellulose exports. Reigniting growth and creating more and better jobs are crucial Average inflation fell to 4.8 percent in 2024 from 5.9 percent in to consolidate Uruguay’s social gains. To do so, Uruguay needs 2023, remaining within the central bank’s target range of 3 to FIGURE 1 / Annual inflation and inflation expectations FIGURE 2 / Actual and projected poverty rates and real GDP per capita Annual inflation (percent) Poverty rate (%) Real GDP per capita (constant LCU) 12 16 700000 11 14 600000 10 12 9 500000 8 10 400000 7 8 300000 6 6 5 Target Range 200000 4 4 2 100000 3 0 0 2 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 International poverty rate Lower middle-income pov. rate Annual Inflation Two-year ahead inflation expectation Upper middle-income pov. rate Real GDP pc Source: Bank of Uruguay. Source: World Bank. Notes: See footnotes in table on the next page. 58 Macro Poverty Outlook / April 2025 This outlook reflects information available as of April 10, 2025. 6 percent. After a cumulative monetary easing of 300 basis points The non-monetary public sector fiscal deficit is expected to remain since April 2023, the central bank began tightening monetary policy unchanged at 3.3 percent of GDP over 2025-2027, assuming no in December 2024, citing higher core inflation and one-year ahead new revenue-raising measures. However, there are downside risks inflation expectations (6.1 and 6.0 percent respectively in February from pressures for increased social spending, an electoral promise 2025). In March 2025, inflation rose to 5.7 percent y-o-y (5.1 per- by the new administration. cent in February), partly driven by surging food prices. The current account deficit is forecast to average 1.2 percent of The 2024 non-monetary public sector fiscal deficit was unchanged GDP over 2025-2027. Import growth is anticipated to remain mod- at 3.3 percent of GDP. Nominal spending growth accelerated from erate, consistent with the pace of private investment, and reflecting 6 to 9.7 percent, on par with revenue growth, but revenues fell lower global oil prices. Export growth will, however, be affected by short of expectations as inflation was lower than initial official fore- lower global commodity prices. casts. Public debt decreased from 63.7 percent of GDP in 2023 to 62.6 percent of GDP in 2024. Uruguay has among the lowest sover- Average inflation is expected to rise slightly in 2025 as core inflation eign spreads in the region. and inflation expectations remain elevated. However, it is antici- pated to remain within the target range for 2025 and converge to- Labor force participation and employment increased by nearly one wards the 4.5 percent target over the medium term, supported by percentage point each in 2024, reaching 64.3 and 59 percent, re- a tight monetary policy stance. spectively. The unemployment rate remained stable at 8.2 percent. However, informality increased by 1pp over the past two years, Poverty is expected to decline by less than one percentage point reaching 22.7 percent nationally in 2024. over the next three years, limited by fiscal constraints and persis- tent social and economic exclusion faced by those still in pover- ty. Currently, 18.9 percent of the population is deprived in at least Outlook four of 15 multidimensional poverty indicators, spanning educa- tion, housing, basic services, social protection, and employment. Barring any extreme weather events, the economy is projected to grow by 2.3 percent in 2025 and subsequently converge towards Growth may be further constrained by weaker external demand potential in 2026-2027. Growth is expected to be driven by exports, in Uruguay’s main trading partners as well as uncertainty in global particularly of cellulose and tourism, with the latter benefiting from trade policy. Additionally, Uruguay's high dollarization levels pose a stronger Argentinian peso. Private investment is expected to re- a risk amid currency volatility and prolonged tight global financial cover following two consecutive years of contractions but remain conditions. A strong U.S. dollar could complicate servicing dollar- moderate as the monetary stance remains restrictive. A slight ac- denominated debt, potentially increasing inflation and constrain- celeration in private consumption is expected as inflation eases. ing growth. Climate hazards further weigh on the outlook. Recent history and projections 2022 2023 2024e 2025f 2026f 2027f Real GDP growth, at constant market prices 4.5 0.7 3.1 2.3 2.2 2.2 Private consumption 5.4 3.7 1.7 2.2 2.3 2.3 Government consumption 2.6 -0.7 2.0 1.1 1.0 1.1 Gross fixed capital investment 12.3 -5.7 -1.3 4.0 3.5 3.5 Exports, goods and services 11.3 0.8 8.3 2.2 3.0 3.0 Imports, goods and services 14.3 5.7 -1.5 2.5 3.5 3.5 Real GDP growth, at constant factor prices 4.4 0.8 3.1 2.3 2.2 2.2 Agriculture -10.4 8.6 11.3 2.5 2.0 2.0 Industry 5.8 -3.4 4.4 3.7 1.5 1.5 Services 5.6 1.3 1.9 1.9 2.4 2.4 1 Employment rate (% of working-age population, 15 years+) 58.2 59.2 60.1 60.5 60.8 60.9 Inflation (consumer price index) 9.1 5.9 4.8 5.2 4.7 4.5 Current account balance (% of GDP) -3.8 -3.4 -1.0 -1.3 -1.1 -1.1 Net foreign direct investment inflow (% of GDP) 4.1 3.6 -2.9 2.3 2.5 2.6 2 Fiscal balance (% of GDP) -2.7 -3.3 -3.3 -3.3 -3.3 -3.3 Revenues (% of GDP) 27.4 27.4 27.9 27.5 27.0 27.0 Debt (% of GDP) 61.6 63.7 62.6 63.2 63.8 64.0 2 Primary balance (% of GDP) -0.6 -1.0 -0.9 -1.0 -1.0 -1.0 3,4 International poverty rate ($2.15 in 2017 PPP) 0.2 0.1 0.1 0.1 0.1 0.1 3,4 Lower middle-income poverty rate ($3.65 in 2017 PPP) 0.8 0.9 0.8 0.8 0.8 0.8 3,4 Upper middle-income poverty rate ($6.85 in 2017 PPP) 6.4 6.7 6.0 5.9 5.7 5.6 GHG emissions growth (mtCO2e) 1.9 1.3 1.7 1.5 1.5 1.6 Source: World Bank, Poverty and Economic Policy Global Departments. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Data in annual percent change unless indicated otherwise. 1/ Employment rates may differ from official national estimates due to variations in the age group used for calculation. 2/ Non-Financial Public Sector. Excluding revenues associated with the "cincuentones". 3/ Calculations based on SEDLAC harmonization, using 2023-ECH. Actual data: 2023. Nowcast: 2024. Forecasts are from 2025 to 2027. 4/ Projections using microsimulation methodology. Macro Poverty Outlook / April 2025 59 MPO