BCP reduces its growth forecast for the Peruvian economy from 1.7% to 1.1% in 2023

He Credit Bank of Peru (BCP) cut its growth forecast for the Peruvian economy in 2023 from 1.7% to 1.1% in 2023, due to the effects that the El Niño phenomenon could cause in the last quarter of the year. The estimate remains at 2.7% for 2024.

For the remainder of 2023, Credicorp Capital’s Buy Side Research area specified that growth would be supported by mining exports and moderate progress in sectors such as transportation and tourism.

“A factor that could be additional support is public investment, through Con Perú, which, adding the two proposals, add up to more than S/13,000 million, 2% of GDP,” he said. Jonathan GutierrezSenior Associate of Buy Side Research at Credicorp Capital.

Credicorp Capital makes these estimates assuming a stable political and global scenario that improves business confidence for 2023 and 2024.

In terms of inflation, Credicorp Capital It is expected that climatic events will push up some perishable foods, mainly due to the increase in restricted routes. Some of those targeted are rice, lemons, blueberries, mangoes and asparagus.

“Which contains the speed of convergence of inflation towards the target range and, probably, it will be beyond 2023 when it returns to it. The monetary adjustment of the BCRP reference rate would be slowly delayed,” he added.

BCP: MEF would respect fiscal rules

Dario ValdizanExecutive Director of Buy Side Research of Credicorp Capital, said for his part that he does not expect the Ministry of Economy and Finance (MEF) to break fiscal rules (incur more spending or borrowing than expected) to alleviate the slowdown towards the last quarter in 2023.

Instead, he pointed out that, with a “moderate recovery” in production, the fiscal deficit targets would be met, although with pressure on the revenue side and lower spending due to the additional support that the El Niño Phenomenon would demand.

“You have a lot of backs from the public debt side, you can go out and issue and we will see what the financing needs will be in the next Multiannual Macroeconomic Framework, where the financing needs for this and the coming years are analyzed. But our scenario is that the rules are respected”, remarked the specialist.

However, Valdizán remarked that The impact of a reactivation of the private sector on investment is much more powerful on economic growth than one stimulated by the State.

In this sense, he indicated that growth towards the last stretch of the year will depend on how much confidence and stability the Government can transmit to local business, since public investment would not have a decisive participation based on “social programs”.

“There is an electoral effect due to the authorities elected this year. The effectiveness of the spending that could be generated with the received budget, given the normal learning curve, is lower than that which a private party would generate,” Valdizán remitted.