Julio Velarde: “Improvement of expectations is being very slow”

Since January of this year, business expectations have improved, but at a snail’s pace, despite the ravages of inflation, social unrest and natural disasters caused by the passage of the Cyclone Yaku.

At the end of May, of 18 indicators, eight are in the optimistic rangeaccording to the survey carried out by the Central Reserve Bank of Peru (BCRP).

It is worth noting that the businessmen surveyed by the BCRP They give their point of view on the performance of the economy, their sector, the situation of their company, demand for their products, hiring personnel and investments from their firm. In each of these criteria, the outlook is more encouraging at 12 months (see infographic).

Corporate optimism is higher regarding demand (63 points) and the situation of companies (62 points).

Julio Velarde. He confirmed that the country’s economic activity stagnated in the first quarter due to social problems. Photo: diffusion

Advanced is not enough

Julio Velarde, president of the BCRP, considers that confidence “unfortunately” improves so slowly that “some better news is delayed.”

In his opinion, it is urgent to unlock large projects, such as Chavimochic (La Libertad) and Majes Siguas II (Arequipa), for this reason, it has already spoken with the Ministry of Economy and Finance (MEF) so that —together with regional governments— actions can be resumed in a large mining project, such as Zafranal (Arequipa).

“Who wants to invest $2 billion or $3 billion in a mine? and then not be able to get the production to the port? Nobody,” she said at an inPeru event.

Velarde He added that the conditions are right to reverse the deterioration in business confidence, but this will be a very gradual process. Just around the corner is the greatest global demand for copper for the energy transition, considering that electric cars demand four times more red metal than a conventional one, which forces Peru to also invest in electrical infrastructure.

Mypes do not share the enthusiasm

Daniel Hermoza, director of Mypes Unidas del Perú, comments that mypes do not feel the same enthusiasm as large companies, since the actions of the Government of Dina Boluarte do not coincide with their statements.

“Five months ago they launched the second tranche of Purchases to Myperú for uniforms for S/172 million and the contest has not yet been launched,” he said.

In addition, high inflation requires mypes to raise their prices to consumers, which is why sales are enough to survive, in a framework where businesses are over-indebted even with extensions and renegotiations in programs such as Reactive Peru or the FAE, since “they still do not know how they are going to pay for it because they do not perceive the statistical rebound to feel more relieved.”

GDP with a downward bias, according to Velarde

This year the Peruvian economy is expected to grow just 2.6% —before the projection was 2.9%. However, Velarde commented that the GDP has a downward bias “because of everything that has happened up to now.”

The head of the BCRP described the rate of Peruvian GDP estimated for this year as mediocre, but recalled that Peru is in a better situation than other countries in Latin AmericaAlthough this is not cause for celebration either because Latam “is almost irrelevant”.

“It is a mediocre growth, but it is in the entire region. We are not so bad in front of Latin America, it’s just that Latin America is a disaster”, concluded the banker.

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Julio Velarde, President of the Central Reserve Bank of Peru

“There is a slight improvement (in business expectations), but they are being very gradual, very slow. Unfortunately, it is such a slow improvement that better news is delayed.”

Daniel Hermoza, Director of United Mypes of Peru

“He Government It cannot make interesting announcements, but it does not act at the speed that the situation warrants (…). Mypes in general do not share the enthusiasm that things will improve.”

Results of the economic expectations survey