Wake up call. International organization reduced growth estimate to 2.4% and asks the Government resolve the political crisis. While the issuing entity warns that the greatest negative impact is being observed in the southern regions. A loss of US$600 million is estimated due to the entry of fewer tourists.
Since December of last year, Peru has been going through a social outbreak, in which the resignation of Dina Boluarte to the presidency of the Republic is demanded, as well as a early elections generals. This brought with it mobilizations and protests of the population at the national level. Product of this sociopolitical conflict, the Peruvian economy has been deteriorating.
In this way, the International Monetary Fund (IMF), after its official visit from January 24 to February 8 of this year, decided to cut its economic growth forecast for 2023 from 2.7% to 2.4%.
According to the multilateral entity, “real GDP growth is expected to slow down” this year; however, he forecasts that it will reach its potential of 3% in the following years.
“Recent political events suggest that the Government It must work across the political spectrum to restore confidence, preserve stability, accelerate structural reforms to boost economic activity, and address inequality, poverty, and weaknesses in the education and health systems,” the international organization summarizes.
The IMF also emphasizes the impact of the strikes at the main mining sites, which affects the production and export of copper.
The International Monetary Fund cut the country’s economic growth to 2.4%. Photo:
Macrosur, the most affected
For the Central Reserve Bank of Peru (BCRP), the economic impact of the protests has already been observed in the preliminary data obtained for the first month of 2023.
Adrián Armas, Central Manager of Economic Studies of the BCRP, explained that the impact has occurred especially in the southern regions, where Cusco and Puno have registered a significant drop in their level of sales during January.
“The economy is facing a major negative shock unfortunately. There are signs of a slowdown, especially in the southern part of the country,” Armas said.
The BCRP official specified that the affected regions are Arequipa, La Libertad, Cusco, Ica, Lambayeque, Cajamarca, Puno, Tacna, Apurímac, San Martín, Ucayali, Amazonas and Madre de Dios, which have a weight of 31.7% in the GDP.
Although Armas indicated that it is premature to estimate the full economic impact of the protestspointed out that mining companies such as Minsur or the Las Bambas mine have had stoppages, which affects the production of this sector.
Finally, he said that the risk of lower growth in domestic demand has been rising due to the current situation.
The economic impact due to the protests has hit the southern regions the most. Photo: diffusion
US$600 million will be lost due to fewer tourists
According to BCRP estimates, Peru would lose US$600 million in the first semester due to the lower inflow of international tourists.
“All of this leads to a current situation where the economy is facing a significant negative shock, that is what we are currently observing. The southern zone is affecting confidence in the rest of the country,” clinched Arms.
It is worth mentioning that on February 15, the INEI will reveal the evolution of the economy at the end of 2022. In this regard, the official of the issuing entity announced that the result is expected to be less than the 2.9% that they had predicted in their last projection published in its inflation report.
The word
Adrián Armas, central manager of Economic Studies of the BCRP
“This begins in the month of December and is seen more clearly since January, which shows a slowdown in economic activity, these effects, for the moment, it is observed that they have been differentiated.”
Source: Larepublica
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