The Superintendency of Banking, Insurance and AFP (SBS) warned that a moderate El Niño Phenomenon (FEN) and an intensification of social conflicts for the second half of 2023 would negatively impact the financial system, as well as the economy in general.
In a scenario that only contemplates a moderate FEN in 2023 and the possibility of reactivating social conflicts in the second half of the year -in addition to a weak FEN in 2024-, the SBS anticipates a stress on the Peruvian economy with a growth of only 0.8% of GDP in 2023 -from the forecast of 2.6% of the MEF-, and 1.7% in 2024.
However, a scenario severe stress with a strong coastal FEN in 2023, prolongation of the Russia-Ukraine war, escalation of tensions between the US and China over Taiwan, and an increase in the FED reference rate, it would lead to the Peruvian economy falling -1 .5% in 2023 and advance only 0.8% in 2024.
It should be noted that these are two scenarios that simulate crashes that, although they are of great magnitude, “they are not of high, but of low probability”, settled the SBS. In this sense, the superintendency affirmed that the financial system, as a whole, would remain solvent, even “in the face of a severe stress scenario.”
“The resilience of the Peruvian financial system in the face of adverse macroeconomic scenarios is explained, in part, by the levels of capital and voluntary provisions above the regulatory minimum,” the report states.
Mypes and medium-sized companies, the most affected by FEN
However, the SBS reported that a stress scenario, with a moderate FEN 2023 and an intensification of conflicts from July, It would lead to “greater deterioration” for the portfolios of Medium Business, Mypes and Consumption.
In this way, the default ratio of the medium-sized company in the financial system, on a base of 5.8% as of December 2022, would grow 1.8% in 2023 -well above the 0.9% forecast-, and 0.1% in 2024.
The default of credits in the Mype sector, with a base scenario of 8.5% at the end of 2022, it would shoot up to 2.1% in 2023 and 1.9% in 2024, from an initial forecast of 0.9% and 0.2%, respectively.
Regarding Consumption, with a default ratio of 6.2% as of December 2022, it would climb to 1.8% in 2023 and 1.9% in 2024, from the 1.4% considered for the current period.
“The credits of mypes present a significant concentration in the commerce and services sectors, which would be strongly affected by the occurrence of a coastal and global El Niño Phenomenon,” the institution stated.
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