The weather phenomena and the social upheaval in the first months of the year have slowed down the progress of the Peruvian economy so far this year. These events have also led to downward adjustments in growth projections by various institutions, both state and private.
One of the most recent entities to lower its forecasts for the year 2023 is Credicorp Capital. The chief economist of this organization, Daniel Velandia, has announced that the expected growth of the national Gross Domestic Product (GDP), which was estimated at 2.3% at the beginning of the year and was reduced to 1.8% in the first quarter, has now been cut further and stands at 1.3%.
According to Velandia, various negative factors have impacted the Peruvian economy as a whole. Among them, the suspension of the first fishing season in the north-central area due to weather factors.
“For the first time since 2008, since these anchovy fishing quotas existed, the first fishing season in the north-central zone is suspended and fishing is already falling at rates of more than 70%, according to the latest INEI data” he commented.
In addition, he highlighted the impact of the Yaku and Niño Costero climatic phenomena on agriculture. The 20% drop in this sector during April was the strongest in 30 years.
Added to this were the problems with access to fertilizers that Peru faced last year and which, as expected, affected the 2023 harvests.
These elements, together with the decrease in fishing and the slowdown in domestic demand, have led to a projection of practically zero growth in the first half of the year, Velandia maintains.
However, the Credicorp economist expressed expectations of an improvement in economic activity during the second semester. “We expect that the economy, after being close to 0% and growing in the first semester, will have something close to 2%, in such a way that the growth rate of 1.3% is reached,” he stressed.
The economist mentioned that private consumption continues to advance and is expected to be an important source of growth, especially due to the decrease in inflation, which frees up disposable income for households. In addition, incoming tourism is presented as another factor that will boost the economy in this period.
The economist also mentions that business confidence has shown a rebound and this trend is expected to continue in the coming months and quarters. “This will depend on the stability of the country’s socio-political conditions,” he stresses.
downward bias
The Credicorp economist also specified that there is a risk that the Peruvian economy will advance less than 1.3% in 2023. This bias is driven by two factors.
One of them is the possible sharpening of the global economic slowdown that would result in a drop in the prices of raw materials such as copper, which is the main mineral exported by our country.
He adds that in the local scenario a determinant will be the impact of the El Niño phenomenon. “If El Niño is moderate, let’s say that there is no major impact, there could be an impact, but not that great. But, of course, to the extent that the intensity may be greater, there may be significant risks for economic activity,” he emphasizes .
Source: Larepublica
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