Economy & Business - April 2022

ECONOMIC HIGHLIGHTS

PERU | Minimum wage hike. President Pedro Castillo signed a decree on 3 April raising the monthly minimum wage by 10.2% to PEN1,025 (US$281.59). This was the first increase in the minimum wage since March 2018, when former president Pedro Pablo Kuczynski (2016-2018) raised it by 9.4%. The new minimum wage will come into effect on 1 May. The decision has been criticised both by trade unions, who argue that the increase is insufficient given the level of inflation since the previous raise, and by business associations, which say they were not consulted on the wage hike. According to the latest inflation figures, released by the national statistics institute (Inei) on 1 April, monthly inflation in March was 1.50%, bringing annual inflation to 7.45%.

ECUADOR | Decent but could be better. The director of Ecuador’s central bank, Guillermo Abellán, announced on 31 March that the country’s economy expanded by 4.2% in 2021, surpassing the projected annual growth figure of 3.55%. Household consumption grew by 10.2% in 2021 on the previous year. However, the construction sector, which makes up 58% of total national investment, declined by 6.6%, the third consecutive year of contraction. Abellán announced an increase in the 2022 GDP growth forecast from 2.55% to 2.8%, but he cautioned that more private investment was necessary to drive growth. Abellán said that GDP growth could reach as much as 4.04% in 2022 with greater local and foreign investment. “We cannot postpone this if we want to reach higher levels of growth, create employment, and combat poverty,” Abellán said. Exports totalled US$19.45bn in 2021, contracting by 0.1% on the previous year, due to a decline in coffee, banana, cacao, and oil sales, which were affected by pipeline damage in late 2021. But non-oil exports, such as shrimp, fish, cut flowers, and mining surged to record levels. Imports increased by 13.2% year-on-year to US$20.64bn.

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