Peruvian economy will grow a solid 4% during 2022, according to Moody’s

According to Moody’s, the Peruvian economy will grow 4% in 2022, although this forecast will not be immune to the uncertainty sown by the public policies of the Government of Pedro Castillo.

This announcement given in the Inside LatAm: Peru Webinar resembles the estimates of the International Monetary Fund, World Bank, as well as the Ministry of Economy and Finance and the Central Reserve Bank of Peru (see infographic).

In addition, they detailed that the expected real growth of the gross domestic product (GDP) for this year will be 12% —it could even reach 13.5%, according to the vice president of the moody’s group Investors Service, Jaime Reusche—, thanks to the high prices of raw materials.

Slight optimism

Reusche explained that Moody’s projections can be interpreted as “a compliment to the robust economic model”, which continues to grow despite the continuous “swing” of the Castillo management.

Added to that there are no clear signs of changes in the Constitution.

“We have not seen projects to reform the Magna Carta, We haven’t even seen some kind of measure that tells us that the deficit is going to spill over in the next two years. In that sense, there is some room for optimism and that guarantees the stable outlook we have in qualifying, ”he noted.

Likewise, he acknowledged that “the technical hand of the MEF is always seen to calm things down” and there is “relative moderation from the authorities”, but in the face of latent political tension – such as the motion for vacancy – only uncertainty will be lengthened.

Respect and collect

On the other hand, the former director of the BCRP Elmer Cuba pointed out that there is currently a strong fiscal consolidation, to the point that the deficit will end this year below 4% and by 2022, less than 3%, for which a greater fiscal consolidation and control of spending will be required, added to the fighting against tax evasion and encouraging higher tax collection.

Finally, the head of the MEF, Pedro Francke, said that the Government will maintain the foundations of the current economic model, although it is necessary to apply the tax reform in favor of equality and to address the health emergency.

Favorable rating

Reusche added that despite Peru’s rating downgraded – after 20 years – from A3 to Baa1, it remains “relatively favorable due to economic strengths,” although these no longer have the vigor of previous years.

In his opinion, the Peruvian economy would grow by 6% for next year if we “let the economic model work.”