BCRP: business confidence does not improve in the first semester

As every month, the Central Reserve Bank of Peru (BCRP) published the results of its business expectations survey, which reveals how much the confidence of economic agents has varied in June of this year.

Thus, business confidence closed the first half of 2023 with most of the indicators in pessimistic territory. Of the 18 points that are evaluated, only 6 are in the optimistic tranche and are mainly under a 12-month horizon.

In detail, the expectation for the economy was reduced to three months from 45 to 43, in line with the recent downward adjustments of up to 1.3% in the projections for the GDP by 2023 by various local and international entities.

“Most indicators of expectations decreased compared to the previous month. The biggest contractions were registered in the expectation of the economy at 12 months, as well as in the situation of the sector and the company at 3 and 12 months”, summarized the monetary entity.

Regarding the investment of their company, the directors are more pessimistic than three months ago. In accordance with Juan Carlos Odardirector of Phase Consultores, this result anticipates that no new investments are coming in Peru and that the economy would remain cold throughout the following months.

“We are talking about a very adverse environment for investment. The indicators of falling investment are already in double digits and the end of the period of falling private investment does not seem to be close”, pointed out Odar.

Without confidence

For Daniel Hermoza, director of United Mypes of Peru (MUP), there is still uncertainty about what may happen in the country, since the announcements of new protests put tourism and commerce in the south at risk. In addition, to this is added the El Niño phenomenon, which also affects economic activity.

“It is very difficult for a father of a family to go south with his children and there is a road blocked or violent mobilizations in these cities. Nobody knows what will happen. With what we are seeing, expectations are quite cautious in relation to an improvement in the national economy, we are not convinced. Despite the fact that inflation has fallen a bit, it is not enough for mypes to feel that this last semester is good,” Hermoza told La República.

For his part, Juan Carlos Odar added that the results of the survey show that the Executive Branch has not been able to recover business confidence at the end of the first semester, so there is a complicated outlook for the end of 2023.

To reverse this situation, the MUP representative indicates that private consumption must be reactivated through the creation of temporary jobs, since purchasing power may improve and more citizens will be able to spend, which will help increase sales of small businesses. .

12-month inflation expectations fell to 3.83%

The 12-month inflation expectation for the average of economic analysts and the financial system went from 4.21% in May to 3.83% in June.

For the director of Phase Consultores, this is good news, since it means that economic agents are confident that inflation will reach the target range of between 1% and 3% by the end of 2024.

The economist explained that this moderation in inflation expectations is due to the fact that this indicator decreased from 7.89% in May to 6.46% in June, being the lowest rate in the last 16 months.

The inflation expectation for 2023 was reduced to a range of 4.40% to 5.60% in the last poll; while, by 2024, it remained between 3% and 4%.

The word

Juan Carlos Odar, business director

“Confidence is not recovered, beyond the statements of the Minister of Economy. The dynamics of private investment is not noticeable. The Government insists on boosting public investment and zero private investment announcements.