For much of 2022, the Peruvian economy, despite continuing in the positive tranche, tended to slow down. The social conflicts after the failed coup d’état by Pedro Castillo and the police repression of the Dina Boluarte regime before the clamor of a constituent assembly meant that in January of this year the GDP fell 1.12%, after almost two years of growth.
By February there would already be some hint of recovery, but even so a negative result is expected, said Carlos Montoro, monetary policy manager of the Central Reserve Bank of Peru (BCRP).
“The greatest impact of the conflicts was seen in January, with a cost of around 4 percentage points in growth. For February, it is estimated that in the south it will be 2 percentage points. With this, it is estimated that economic activity would be better than January, however, a slight contraction is expected for February,” Montoro told La República during the presentation of the April Monetary Program.
Along these lines, Montoro projected that the rains and mudslides generated by the passage of Cyclone Yaku could have affected GDP growth by 1% for March, although he was optimistic about the recovery as the incidence of both problems decreased.
Thus, for the first quarter, the BCRP forecasts that there will be zero growth in the economy, and only since the second, the GDP will rebound 2.8% to end 2023 at 2.6%. It is worth noting that a few weeks ago the BCRP lowered its projection, which was at 2.9%.
inflationary reduction
Montoro assured that In April of this year, inflation will finally come off the 8% threshold as the drop in food prices is observed. such as lemon and a lower impact due to household expenses in education (read, registration, purchase of supplies and uniforms).
“We hope that in the following months, for example in the month of June, inflation will also drop substantially and little by little we will approach the target range (within 1% and 3%),” he said.
Inflation directly affects food prices. Photo: Mary Luz Aranda/URPI-LR
The inflationary decline is explained by the moderation of the global attacks on food and energy prices, as well as by the reversal of supply shocks in the agricultural industry and less pessimistic expectations.
IMF: “More taxes on the rich to curb inflation”
Latin America must implement stricter fiscal policies to mitigate the inflation, such as raising taxes on the rich and taking “some weight” off the region’s central banks, thereby helping to curb domestic demand, allowing interest rates to be cut early.
The IMF recommended “being more progressive” with tax systems, since “the rich can avoid paying taxes thanks to exceptions”.
Source: Larepublica
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