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Cyclone Yaku will limit economic growth

Cyclone Yaku will limit economic growth

In January of this year, the Peruvian economy intensified its slowdown and fell 1.12% due to the social demonstrations that began since Dina Boluarte came to power, according to the National Institute of Statistics and Informatics (INEI).

Given the eventual phenomenon of El Niño Costero that would unleash the passage of Cyclone Yaku through our country, the GDP would stagnate at 0% at the end of the first quarter, despite the recovery in the demand for electricity, mining production and public investment, according to the former Minister of Economy and Finance Luis Miguel Castile.

“We were already coming from six months of continuous slowdown. With the activity of Las Bambas in January and the strong impulse of public investment in February, it would also help construction to recover towards March, but Low growth is likely in the first quarter due to the supply shock”indicated to the Republic.

MEF is enthusiastic

The contraction of January will not be repeated and the economy could head for 4% as of April, according to estimates by the head of the MEF, Alex Contreras.

He added that expectations about job creation, demand and the situation of a company and the economy in general have already returned to the optimistic path for the next 12 months, which also keeps GDP afloat.

Contreras Miranda is aware of the shock that El Niño Costero would cause and stresses that regional governments will continue to be financed to reduce the impact of natural disasters and giving tax facilities to companies so that they comply with their obligations.

Is the MEF reading optimistic? For Monica Muñoz-Najara specialist from the Network of Development Studies (Networks), yes, since private investment is expected to fall this year, but the Executive expects it to rise 3%, without considering that the tensions with Congress or the protests they have gone out, so investors still view our market with uncertainty, and under these edges, “we cannot grow more than 3%”, unless there are “extraordinary conditions”, something difficult in the midst of the climate emergency and social discontent .

Muñoz believes that the Peruvian economy is resilient and has shown more than once to withstand everythingbut believes that the 2% barrier will not be passed by March, although it will not reach negative ground either.


However, according to the analysis of the BBVA ResearchFor the first three months of the year, a paralysis in the Peruvian economy is anticipated.

“We are anticipating a plateau for the first quarter on a year-over-year basis, there may be a slight contraction. The impact of Cyclone Yaku will not be that of 2017, but it will have a negative impact,” he added. Hugo Pear, Chief Economist at BBVA Research. In this line, they reduced their estimate of economic growth from 2.5% to only 1.9% for the end of this year. Nevertheless, by 2024, the bank expects a rebound effect and 3.0% will be reached.


Hugo Perea, Chief Economist at BBVA Research:

“The economy has been slowing down due to idiosyncratic shocks such as social protests, Cyclone Yaku, anomalies in sea temperatures and an external context with lower global growth.”

Mónica Muñoz-Nájar, Economist NETWORKS:

“The country is expected to grow less than 3% this year. I think it will be closer to 2.3% or 2.4% because the fall in January will weigh heavily. The MEF is optimistic to give good signals to the market”.
Infographic: The Republic

Infographic: The Republic

Source: Larepublica

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