Expectations and the need to look at trajectories
Kurt Burneo Farfán, former Minister of Production.
Reviewing the data from the macroeconomic expectations survey to October that the BCRP applies monthly, in the case of the businessmen’s view of the general economic situation in 3 months, it improved from 35 to 43 points between September and October; and the 12-month expectation did it from 45 points to 51 points, placing it in the optimistic section.
In this regard, if we look at the indicated numbers for October versus September, there is an improvement in expectations, but these numbers should not be looked at punctually each month, but rather the trend should be observed, and if we look from July onwards, it is quite erratic.
On the other hand, optimism would be more evident for one year than for the next 3 months, which would reveal the least optimism relative to the immediate months, with which they would be anticipating some new events that generate uncertainty and / or the not yet resolution of previous situations generating this.
In the end, the cessation of the Congress-Executive confrontation and clear announcements of plausible economic policy would go a long way from the political and economic sides respectively to achieve a sustained improvement in business confidence.
Business Expectation: Spring or Trend?
Eduardo Recoba, economist, iForex correspondent
Of the 7 discriminators that the Central Bank polls for the construction of expectations of the “decision makers”, all – as of October 31 – have registered a positive signal for their estimates; in the previous survey, all filters dropped.
In the trajectory of opinion, he highlighted the extinction of a “radical” cabinet, whose culminating point was a language discourse around the mantra “nationalization versus nationalization” and its austere ministerial cadres; being replaced by the Mirtha Vásquez cabinet from a “more democratic” space.
The expectation was strengthened with a dollar partially tamed in a range between 3.99 to 4.01 units per US currency, behind a roof of 4.14 units.
The transmission of clear signals to the markets causes a better environment based on the expectations of the economy and governance, as well as business; nonetheless, the bouncy tone of the poll can be a “spring” after a hundred days of disorder.
With “Cerronismo” still alive, a Congress with an undemocratic vocation, counter-marches in economic matters (poorly communicated tax reform) and a parsimonious learning curve of President Pedro Castillo, will this “spring” end in the next poll? We will see.
Encouraging signs but more to go
Armando Mendoza, economist
The recent improvement in business expectations indicators is a positive development, reflecting the gradual recovery of the economy. This is complemented by the activity indicators; as consumption of electricity or import of capital goods; which are also evolving favorably and are already at levels higher than those prior to the pandemic.
This situation, although satisfactory, cannot give rise to complacency. The next few months will be critical to underpin the economic and social recovery. Much will depend on the health situation, being key to consolidate the vaccination process. Likewise, it is essential that the improvement in macroeconomic figures is reflected more in the economy of the people. Proper employment is finally being regained, but we are still well below 2019 levels. It will take time and effort to make up for what was lost.
The biggest challenge is how to achieve an economic recovery that is not just a return to the past. The pandemic left us with painful and tragic lessons that cannot be forgotten. This includes the need for fundamental structural reforms; tax, health, agrarian, among others; that really mean a change in the lives of Peruvians. That is the main challenge.
Slight optimism about economic developments
Jorge Guillén, associate professor at ESAN University
In October, business expectations had a slight rebound compared to the previous month. The index registered 50.97, which implies that there is a slight optimism about the economic evolution. Recall that this index fell to 47 in June, contrasting with the digits of 60 during President Sagasti’s term. At its best, this expectation index reached 70 points under President Kuczynski and in 2010 it reached more than 80.
It is precisely with the current government and the political uncertainty generated at its entrance that we have the lowest expectations indexes, and it is possible that the departure of Prime Minister Bellido in October has allowed business confidence to improve slightly. The business confidence index goes hand in hand in an inversely proportional way with the evolution of the dollar. That is, when confidence increases, the dollar falls. When the political climate became very critical, the dollar reached more than S / 4 and then when the political environment became favorable, the dollar began to decline.
The government of Castillo apparently he chose to moderate his government plans, combined with many indecisions in the country’s strategic plan. This would imply that the forecasts point to S / 3.8 per dollar by the end of the year, with business expectations that are around 40-50.
The current business situation index is worrying
Javier Zúñiga Q., former dean of the U. de Lima Faculty of Economics
The latest results of business expectations prepared by the Central Reserve Bank of Peru (BCRP)As of October, they show an improvement in the seven indices that compose it; however, only two of the seven indices have returned to the optimistic range; that is, above 50 points.
It is important to indicate that the sales index with respect to the previous month (50.6) and of expectations of demand for 3 months (53.6) are these two indicators in an optimistic range, while the inventory indexes (48.1) , purchase orders (48.3), current business situation (49.1), expectations of the economy (42.5) and the sector (48.7) remain in the pessimistic range, in the survey of business expectations of the Central Reserve Bank of Peru.
The positive results in terms of the sales index and demand respond to the seasonal factor of the Christmas holidays that, for example, merchants buy products months in advance to be able to sell them during the months before Christmas.
The concern lies in the evolution of the index of the current situation of the business, which, with 49.1 points, is the only indicator that has remained in the pessimistic range since February 2020, month in which his score was 52.2.
Implement long holidays, a very good measure
Carlos Canales, president of the National Chamber of Tourism
Expectations were bad. We expected between five and six million domestic travelers by the end of the year. However, the government’s implementation of long holidays has been a very good measure.
This has increased the figure that we had in mind and we will reach 10 million tourists by the end of this year, taking into account the holidays that come like December 8 and December 8. Christmas.
This represents about 800 million dollars in income for the country until December of this year. But the difference is very big compared to the year 2019 in which there were 48 million travelers.
As for inbound tourism, things are very bad. In 10 months we have had the visit of 220 thousand foreigners and only 15% go to Macchu Pichu. Before the pandemic, we had 380 thousand tourists in a month. It’s a huge setback.
If we want to exceed 300 thousand tourists – which is our forecast for the end of the year – the only way is to open borders. Today the only point of entry to Peru is through the Jorge Chávez airport.
Normally there were a million and a half tourists who entered through the borders such as Tacna, Puno, Tumbes and Iquitos. Today all those entry steps are closed. No people enter, only merchandise.