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BCRP: Private investment would fall 0.5% for the second consecutive year

BCRP: Private investment would fall 0.5% for the second consecutive year

For the second consecutive year, the private investment in Peru it would have a fall of 0.5% at the end of 2023, a figure similar to that registered during 2022. This was announced by the Central Reserve Bank of Peru (BCRP), which revised its projection downward on the performance of this indicator. In its previous report from three months ago, the monetary entity expected investment to grow; however, he now forecasts a pullback.

We are lowering private investment slightly from 1% to -0.5%. It’s hard to know what could happen. Indeed, if confidence is restored, there could probably be a larger recovery. We must remember that last year private investment was still relatively high,” said Julio Velarde, president of the BCRP during the March 2023 Inflation Report Presentation.

According to the banker, the greatest drop would be observed in mining investment, with -16.7%. This contraction is mainly due to the fact that large mining projects are not being built in Peru, which is happening in the neighboring country of Chile. Meanwhile, non-mining investment is projected to grow by 1.5%.

“For this year, the significant contraction would be mining investment, there are no new important mining projects under construction; there is Zafranal copper, hopefully the one Newmont has in the north could be done, which was announced a long time ago, but there is still no a concrete announcement When you look at Chile, you notice that there is a huge chain of new mining projects; In Peru, we have been left with small mining projects in number and magnitude compared to the investments we had before. We do expect non-mining investment to grow 1.5%, and given the drop in mining investment, we expect that at the aggregate level, adding mining and non-mining, it will fall 0.5%,” Velarde pointed out.

Private investment for 2022 and 2023. Source: BCRP

Private investment for 2022 and 2023. Source: BCRP

Despite the fact that the percentage figure would be negative for this year, the president of the issuing entity specified that private investment remains relatively high. He explained that, during 2019, the private disbursement was US$41,774 million, while last year it amounted to US$49,725 million. For this year, the private sector would invest US$51,848 million.

“In real terms, it is growing little, but it is still high. If one compares 2022 versus 2019, the real growth has been almost 5% per year, more than the product. The private investment about the product has been growing; This year that will not happen, but in the last three years it has happened on average,” Velarde emphasized.

Source: Larepublica

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