“Before protestsit was known that it would be a year with low economic growth for Peru. All this situation confirms that it will be less than estimated. The projection of economic growth was between 2.4% and 3%, and it will probably be closer to 2.4% than 3%”, said Mónica Muñoz-Nájar, economist at the Development Studies Network (REDES) to Trome.
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“Peruvian economy can resist, but not if the period of blockades is continuous”
In dialogue with our newspaper, Muñoz-Nájar clarified that, despite everything, “the Peruvian economy can resist, but not if the lockdown period is longer or continuous, which prevents mining and agro-export production” (The growth data depends a lot on them and they are the activities that have had the most problems to develop).
Even among nationals: “Who wants to invest in a country where they don’t know if tomorrow they will be able to get their production out or not? That Mistrust and instability have a long-term impact. In 2024 we will grow less than we could”, he told Trome.
Expectations and business confidence
He pointed out that last December, business expectations improved somewhat and people were more optimistic about what was coming for this year 2023, but in January the indicators of business confidence and hiring expectations fell again.
Tourism and services the most affected sectors
The impact will be harder in sectors such as tourism, which is one that requires a lot of foreign confidence.
“Before the pandemic, Peru received 4 million tourists, last year 2 million 200 thousand. This year it will be impossible to recover those 4 million and if it reaches 2 million it will be a miracle. Sand many reservations have been cancelled, several embassies have warned their citizens not to come to Peru and that will take time to recover; But they are mThere are those who work in restaurants, hotels, transport services and they are going to have a very difficult timeeven if the protests end tomorrow.”
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And the inflation?
“Prices remain high due to an external factor, but the blockades have had a trigger effect,” said the specialist from the Development Studies Network (REDES).
and clarified that “it’s a temporary shock. Once the blockades are over, inflation should return to its path of 7%, but while things will continue to be more expensive and difficult (more expensive vegetables, more expensive gas, some things are missing), especially in regions where there are blockades”.
Recession risk?
“No. The recession occurs when there are six months of falling production. It could be presented at a technical level (for statistical purposes), but it is not a recession. The economy will continue to grow, little and slowly, but growing”, Muñoz-Nájar told Trome.
He added that“as citizens, what matters is ‘if there is a job or not a job‘ and employment is being maintained, except in those linked to tourism and services in the affected regions, which are the ones who will have the most difficult time in the coming months”.
Please note:
- Take care of your budget (many have spent savings, CTS, AFP, bonds), monitor expenses (write them down and see where your money goes).
- Be aware. Prices will remain high this year.
- Do not borrow in dollars if you win in soles. Don’t risk it.
- In the face of strong blockades, keep looking for meal replacementchanging the menu.
- Since the economy is going to grow little, it will be more difficult to get a better job (Less chances of getting where they pay more because fewer jobs are generated).
- Dollar: “The exchange rate it has not been affected by roadblocks. It has small ups and downs, but they are typical of the market”, the economist maintained.
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