Venezuelan Immigration to Peru: characteristics and macroeconomic impacts

Summary

Venezuelan immigrants to Peru over the last three years (more than 800,000, equivalent to 2.4% of the Peruvian population) have had non-negligible impacts on aggregate demand and potential GDP.

Key points

• Key points:
• Most of them are in working age and have a higher number of years of schooling than the average Peruvian population.
• The fiscal impact of Venezuelan immigration is positive and is equivalent to 0.08% of GDP as an annual average for 2018 and 2019.
• Taking into account the increase in labour supply and in human capital due to Venezuelan immigrants, we estimate that potential output has jumped (a one-off effect) over the last three years. In addition, the demand of goods and services of Venezuelan immigrants has had a positive impact on actual GDP, but lower than on potential output.
• As a result of the differentiated impact on potential and actual GDP, the output gap (which is currently negative) has widened.
• The more negative output gap has implications for our inflation forecasts. This, together with a lower neutral interest rate, suggests that, in the future, a more accommodative monetary policy cannot be ruled out.

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