Business expectations do not rise and MEF asks to trust in the long term

The month of April has been a carbon copy of March in terms of problems, opportunities and hopes for recovery for businessmen. According to the latest Survey of Macroeconomic Expectations of April 2023, designed by the Central Reserve Bank of Peru (BCRP), the forecasts for the sector that moves the strings of the economy remained static and, in some cases, even fell.

Expectations are taken on the basis of 50 points. If they overcome this fence, they are considered “optimistic”, otherwise, they are “pessimistic”. Thus, the vision of businessmen regarding the national economy for the next 3 months, in the short term, advanced slightly from 43 to 44 points compared to the March survey. The needle at 12 months did move from 52 to 54 points. “There is optimism. The expectations of the economy have improved in the short and long term, as well as investment and contracting. These are observed variables, they are not even projections,” Economy Minister Alex Contreras said the day before.

But that’s as far as it went. Although it is true that hiring and investments for the second semester improved from better productivity, this coincides with the fact that the climate emergency is over. In detail, the forecasts for recruiting personnel in the short term went from 45 to 47 points, while, in the long term, they went from 52 to 54. Regarding investments, the long-term score went from 53 to 55, but in the short term weighed down from 47 to 46. In the case of the current situation of the company, the expectations of those surveyed in the short term fell from 50 to 49 points, while in the long term they remained at 58. Regarding product demand , the pessimism of businessmen dropped from 52 to 51 points at 3 months, and from 60 to 61 at 12.

The optimism of the MEF

The other way to measure the thermometer for companies is to know how they receive the new month in numbers. Here, too, optimism is far from that shown by Minister Contreras. If we talk about the current situation, and not so much about hopes for the future, businessmen rated their business downward, from 48 to 47 points in April.

Sales slowed down by 47 points, although production did go from 43 to 47. The end of the climate emergency was also reflected in purchase orders compared to the previous month, with a score that went from 44 to 47. However, the Compared to what was expected in April, demand stagnated at 37 points, well below the border of optimism, although the days of unwanted inventories (products that were not placed) fell from 12 to 11 days.

A month in which the GDP was readjusted downwards

Approach. Óscar Chávez, head of the IEDEP of the CCL

The weather conditions in March may have been an explanation for dragging down these expectations, which remained, in some cases, pessimistic. We must also understand that April has been a month in which most entities, public or private, have readjusted their GDP growth forecasts downward for 2023, in our case, from 2.4% to 2%.

That, undoubtedly, has a strong impact on the business environment on key tasks, such as hiring personnel or around some future investment decision, for example. According to the conjunctural progress of the INEI, the mining sector has shown a significant decrease. We must not forget that, according to all projections for 2023, the engine that will pull our economy will be precisely this sector that has begun to advance again. The important thing then is to deepen this social balance so that the economy becomes more dynamic.