MEF: Peruvian economy would have grown only 0.5% in the first quarter due to rains and social conflict

2023, to date, has been a year of great challenges for the Peruvian economy due to social conflicts and natural disasters. This scenario has changed the growth expectations for the country managed by the Ministry of Economy and Finance (MEF) for the first months of this year, according to the holder of said portfolio, Alex Contreras.

“At the beginning of December we expected growth of 3.5% in the first quarter. Now, as the panorama has changed, we expect 0.5%. There are three points of the GDP that have been lost on average, as a result of the social conflict”, he commented in the Congressional Budget Commission.

According to MEF estimates, the cost of the protests has been dissipating in recent months. Thus, in January it was S/1,870 million, in February it fell to S/1,045 million and in March there were only losses of S/75 million.

In the case of the rains caused by Cyclone Yaku, Contreras remarked that the costs amount to S/1,321 million according to official data; however, he warned that this figure could even double. “According to the latest report, the effects of Yaku and El Niño Costero are leaving us with damages of S / 1,300 million, but this amount can easily double because the loss of local government infrastructure has yet to be recorded,” he said.

In detail, the weather phenomenon affected 659 kilometers of roads (S/332 million), 351 irrigation channels (S/186 million), 216 bridges (S/674 million), and 82 kilometers of water networks (S /14 million).

Public investment performance

So far this year, public investment has also shown signs of recovery and has grown 15.9% at all levels of government through March 26, Contreras said.

“Investment continues to be led by the national government, which is growing 66% in March, in the regional government it is growing 24%, but unfortunately in the local government it is not growing: on the contrary, it is falling,” he said.