Venezuelans May Be Making Peru Central Bank's Job Easier

(Bloomberg) -- Peru’s unprecedented influx of Venezuelan migrants may have resulted in lower inflation and faster economic growth, according to the country’s central bank.

The arrival of hundreds of thousands of Venezuelans since 2017 may have pushed down wages in the retail and services industries of Peru’s capital, Lima, where the majority have found employment, the central bank said in a report Tuesday. That in turn may have led to lower prices for consumers. One example is the cost of eating, with restaurant price inflation in Lima trailing the pace seen in the rest of the country last year, it said.

The increase in consumer demand from Venezuelan migrants may have accounted for as much as 0.3 percentage points of Peru’s 4% economic growth in 2018, the central bank said, basing its calculations on employment and wage data from the United Nations’ migration agency.

Millions of Venezuelans have fled to neighboring countries in the last few years to escape political repression and dysfunction, hunger and hyperinflation under Nicolas Maduro. Peru is the most popular destination after Colombia, receiving more than 750,000 Venezuelans. Many have found work as shop assistants, waiters and security guards in Lima, often displacing local labor. Those most at risk of losing their jobs to migrants are lesser qualified workers in the service industries under the age of 39, the central bank said.

The competition for jobs has increased tensions in Lima and elsewhere. Earlier this month the regional government of Cuzco said it will introduce rules to punish companies that fire Peruvians to hire foreigners. The mayor of Huancayo in the Andes mountains east of Lima earlier this year pledged to make the city free of Venezuelans.

As governments contend with the biggest exodus in modern Latin American history, the World Bank has sought to reassure governments that the benefits of immigration will outweigh the increased demand on public services.

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

To contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, Bruce Douglas, Robert Jameson

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