Miguel Palomino: “I think, hopefully, this year (the Peruvian economy) will reach 1%”

The limited panorama that awaits national production at the end of the year is complicated by the prolonged social discontent towards the Government of Dina Boluarte and the lower business confidence. Palomino believes that the lack of control of the protests can stop sectors that did not materialize their recovery after the pandemic.

─Could the economy grow less than expected for this year?

─The BCRP expects 2.2%, but I think that —with luck— this year we will reach 1%. This is very bad for fighting poverty and improving income, which is the main way to fight poverty. If it is going to grow little, there will be less employmentsalaries and it will be very hard.

─And for the second semester, what to expect from the economic future?

─We have a first semester where we will grow 0% or close negative, and a second that, roughly speaking, would be 2% to reach 1% annually, speaking in round numbers.

─If we are lucky to grow 1%, what sectors would support the GDP?

─The service sector, easily. In tourism, for example, if there are no protests that sink it, it will continue to improve; or those who are recovering from the pandemic. Mining has also grown strongly this year.

─Are we really in a technical recession as has been warned lately?

─We would be in a technical recession when the second quarter is proven to be negative. That is not important, whether it is technical or not, the important thing is to know if we are improving or getting worse. Technical recession does not matter.

─How do you evaluate the actions of the MEF to address the consequences of the protests and the climate emergency?

─The decisions of the MEF have been reasonable within what they can do, but —as a Government as a whole— they could be better. We have left the government of Pedro Castillo, which was the worst and compares to the first of Alan GarcíaWe are out of that, but there is a long way to go to be satisfied with the growth.

─In your opinion, what fails the Government as a whole to meet the needs of the country?

─Lack of conviction and leadership. I understand that it is a lot to ask for Dina Boluarte, but she has to try. And the conviction and leadership is for almost everything and it will affect everyone.

─You mention that Castillo’s government was one of the worst along with García’s first, but we see that in half a year business confidence has not recovered with Boluarte. What’s going on?

─In April and May, most expectations were positive. They were improving, once the social protests were over an improvement was felt, but something happened in June and expectations fell. What happened? I am not clear; but if they continue like this in July, there we are fried. There is a lot of uncertainty regarding El Niño. A very bad one reduces at least 2% of GDP growth, and we are not seeing this scenario.

─Where to aim to mitigate the damage to households in the face of reduced economic growth?

─Raising the minimum vital wage will only reach a quarter of the population. Employment is what should be stimulated, that is, investment. You have to encourage it. Subsidizing is not the right ideawith a few exceptions.

─Any reflection on the social discontent behind the protests?

─Not only the Government, but also the opposition, has to think about Peru, because those most affected by the marches and strikes are those with the least income. They say they want to protect those who have less, that violence should not be used and against the will of the people. The average Peruvian, despite not liking the government or Congress, wants to work.

─How to recover business confidence in a year in which private investment is expected to close at -2.5%?

─As I said, with conviction and leadership. It is what the person who is going to invest needs.

─An eventual resignation of Boluarte and calling for new elections, how would it affect the economic outlook?

─It would be one more factor of uncertainty that does not help, especially in the current context.