Unemployment in Peru: an Economic Concern Economic concerns are important to monitor especially in the case of South American countries whose rich culture is unmatched. Unemployment is defined as the total number of people who are unable to find work at one time (Unemployment, 2003). Several factors affect unemployment, including: the economy, a persons skills, the jobs available, and loss of jobs. The unemployment rate is Peru has started to decrease in the past decade. This has several direct relationships to the economic stability of Peru, and the data suggests this is an ongoing trend.
The unemployment rate has a direct correlation to the economy of Peru. The first relationship to the economic state is through the Gross Domestic Product (GDP). The unemployment rate has a direct relationship to the GDP. For instance, if the relationship between the two is negative there is obviously a high unemployment rate (Levine, 2013). Gross Domestic Product is also a direct indicator of a countrys economic situation. In Peru as the unemployment rate has started to decline the GDP has started to come up in the past decade.
The GDP has increased from $61.347 billion to $197 billion in the last decade (Peru GDP, n.d.). This means that the GDP has increased while the unemployment rate has dropped. The unemployment rate in 2003 was at about 10% and was now at 5.6% (Peru Unemployment Rate, n.d.). This shows that the economy in Peru is improving as shown by the lowered unemployment rate.
The second factor that has come with the growing economy is an increased income and thus increased standard of living. When the unemployment rate drops it means that new jobs are opening up and people already employed are more than likely going to get a raise. Approximately, 562,000 new jobs were created in Peru in recent years, and it will only continue to increase over time (Thompson, 2012). This increase in jobs means an increased standard of living for Peruvian people. If Peru continues to bring in investments and keeps up with other global trends this increase in the economy should be maintainable (Thompson, 2012). The job growth is also improving for higher-paying jobs such as accounting, engineering, law, and psychology, which mean people will also be in better-paying jobs, which will boost the economy.
The job market for formal and informal jobs is also growing, which means more people will have an opportunity to start their careers. This increase in jobs in some of the more global fields will also raise the opportunity for exports and will increase the money flow in the economy. With this change in jobs, it also means that the economy of Peru will continue to grow as will the standard of living.
The third relationship between the lowered unemployment rate and the economy is in regard to inflation. This economic concern will help lower inflation in the years to come. With the lowering unemployment rate, inflation has also had its ups and downs. However, it is projected that the inflation will continue to drop to around 2.7%, which are nearly a 2% drop from 2011 (Economic Outlook, 2013). This inflation is coming closer to the countries target range and mean that the economy is in good condition. Monitoring this inflation is important to Peru because with not as much investment as other countries a rise in prices could seriously damage their current economic stride. If Peru can keep inflation within the target range as suggested the prices should remain the same or nearly the same and keep the economy in its current condition or continue its improvement.
The data trend for this economic concern and how it affects the economy suggests that economy will continue to improve. As seen below in Chart 1, the trend shows that the unemployment rate has been decreasing for a decade and should continue to decrease unless something unforeseen happens. It shows although with several spikes that the data if following the averages is decreasing slowly (Peru Unemployment Rate, n.d.). This means that the economy will also continue to improve for Peru. This is portrayed in correlation to the increased GDP in chart
2. This trend also shows that in the last decade, the GDP has been rising steadily, which means overall that the economy is increasing (Peru GDP, n.d.). The data for GDP and unemployment is connected because as the unemployment rate went down the GDP went up, which only makes sense because with more people working more can be produced.
These are both also correlated to monitoring the status of an economy. Both graphs show that between 2003 and 2013, the economy in Peru was improving, and it appears that it will continue to do so. Chart 3 shows the Year-on-year inflation by percentage (Economic Outlook, 2013). This shows that the inflation rates have started to come into the target range for inflation in the past year as well. Inflation is the steady increase in the level of prices (Editorial Board [EB], 2011). Inflation is also an indicator of a countrys economic state. This lowered inflation could also mean that wages may decrease, but that is yet to be determined. With the lowered unemployment, this could be disheartening to some. The three main data sets show that there is a trend towards a continually improving economy for the Peruvians.
The unemployment rate in Peru has been declining for several years from this change have come a change in its economy. Like a phoenix from the ashes, the economy of Peru has experienced several changes in the last decade that have created a better way of life for its people. With a lower unemployment rate, more jobs have opened up and the Gross Domestic Product has increased significantly. The inflation has also reached the countries target range and as long as the country continues its efforts to keep its economy strong this should stay the same. With these changes, Peru has ranked as one of the most prosperous economies and has created a future for the new generation. Chart 1: (Peru Unemployment Rate, n.d.).
Chart 2: (Peru GDP, n.d.).
Chart 3: (Economic Outlook, 2013).
Economic outlook peru. (2013). BBVA Research.Retrieved from http://serviciodeestudios.bbva.com/KETD/fbin/mult/1302_Peru_Outlook_1Q13_tcm348-374867.pdf?ts=2082013 Editorial Board. (2011). Macroeconomics. Schaumburg, IL: Words of Wisdom. Retrieved from http://wow.coursesmart.com/ Levine, L. (2013). Economic growth and the unemployment rate. Congressional Research Service. Retrieved from http://www.fas.org/sgp/crs/misc/R42063.pdf Peru GDP. (n.d.). Trading Economics. Retrieved from http://www.tradingeconomics.com/peru/gdp Peru unemployment rate. (n.d.). Trading Economics. Retrieved from http://www.tradingeconomics.com/peru/gdp Thompson, M.A. (2012). Employment trends: Peru. GoingGlobal. Retrieved from http://www.goinglobal.com/articles/1041/ Unemployment. (2003). In The Macmillan Encyclopedia. Retrieved from http://www.credoreference.com.proxy.cecybrary.com/entry/move/unemployment
View as multi-pages