MEF: Business confidence will sustain GDP growth

Despite the drop in economic activity of 1.29% in July – with which the GDP accumulates a decline of -0.58% in the first seven months of the year – the Ministry of Economy and Finance (MEF) reaffirms in which the economy will rebound in the second semester and maintains its growth forecast of 1.1% for the end of 2023. While the Central Reserve Bank (BCRP) has readjusted its projection to 0.9%.

For the minister Alex Contreras, the July drop is “within the margin of statistical error.” Specifically, services (0.0%) and manufacturing (-13.7%) are the ones that moved the furthest from the projections, when a performance of 1.5% and -3.7%, respectively, was expected. However, from now on, the outlook would be favorable.

Signs of recovery

“We maintain that there will be a recovery in the third and fourth quarters; “This is going to improve because there are signs of recovery,” Contreras said yesterday in the presentation of economic perspectives.

First of all, the investment At 6 months it scores 17 points, the highest level since March 2019, according to Consultant Support. While expectations for the economy in 12 months remain in the optimistic range with 56 points, which should materialize in greater investment (see infographic).

Another Apoyo poll in September positions Peru (50%) as the most attractive destination for investments in 2024, and leaves behind Chile (36%), Mexico (32%) and Brazil (18%). A jump from fifth place, in April, to first.

Although the official highlighted that these are specific figures, there is a factor that went unnoticed and that is that the FEN intensity forecast has gone from moderate-weak to moderate-strong for the summer of 2024, which is why the BCRP made settings.

Investment boost

In addition to the legislative decrees issued at the beginning of the year to promote the development of public infrastructure that will begin to bear fruit in the second part of the year, the MEF will install deconcentrated teams in regions where budget execution is low to reverse current results.

Puno and Tumbes are the regions that have low execution (35% and 52%) and a deterioration in high growth (-13.4% and -9.2%). AND November will be a key monthas this is where execution usually rises.

It should be noted that public investment closed at 2.1% in the first semester and will only reach 1.5% at the end of the year, according to the BCRP; while private investment—which has a greater weight in gross fixed investment—closed at -10.1% from January to June, which gives a forecast of -5.3% at the end of 2023.

Financial reinforcement to Con Punche Perú 2

As part of the Con Punch Peru 2 plan, the Executive Branch will request, this week, a supplementary credit worth S/4,980 million.

The amount will be used to prepare for the arrival of The boy (S/1,649 million), the fight against anemia, protection of vulnerable groups (S/250 million) and the promotion of citizen security (S/200 million), among other measures.