Julio Velarde: Mining investment will fall 18% this year

Mining is a key driver of the Peruvian economy. However, in the last three years, there is no investment in new projects. Given this, the president of the Central Reserve Bank of Peru (BCRP), Julio Velarde, during his presentation at Perumin, pointed out that mining investment will close the year with a drop of 18%, and by 2024 he estimates that the figures will continue at negative (-7.7%).

The banker did not delve into the causes of the contraction, however, he gave the Government a slap on the wrist for not giving importance to the sector. “Mining has been the engine of the economy in the country. We have neglected it and its importance has not been realized,” said Velarde, who gave Argentina as an example.

Under the motto “we got excited again”, the businessmen of the South American country will meet to discuss how to relaunch its economy with mining as the driving force.

The example of Quellaveco was given. In 2022, economic growth reached 2.7%, largely due to the construction of said mine in Moquegua, whose investment exceeded US$5.5 billion.

“Quellaveco stopped the pot,” said Abraham Chahuan, a senior Glencore official.

For his part, the head of the Ministry of Energy and Mines (Minem), Óscar Vera Gargurevich, admitted that the economic numbers are not going well. This year, his portfolio planned to enable the execution of two mining projects with an investment of US$2,419 million, but by the end of the year another seven more should be unblocked.

There are several reasons that discourage investment. Among them are permits, which are trapped in bureaucracy for more than three years. The Government has offered the digital single window. “It is an important aspect. We are going to optimize it, looking at the problems and overcoming the bottlenecks,” said Vera.

This is how the sectors come

Velarde referred to the situation of other sectors of the economy, since agriculture and fishing face a challenging situation due to El Niño.

The rains caused damage to crops on the coast at the beginning of the year and those in the mountains lack water. In fishing, the drop is also dramatic and would close the year at -26%.
In this way, the year would close with a growth of 0.9 and by 2024 the GDP should recover by 3%, according to the BCRP.

Regarding growth, former minister Alonso Segura said that the Peruvian economy is having a hard time growing; Even in the last four years it did not exceed the Latin American average. “We have macro strengths, but serious growth problems that we must face,” he said.

The former official pointed out that growth is not everything, but it is necessary to confront poverty and the demands of the population.

Regarding this, another former Minister of Economy Miguel Castilla maintained that about 400,000 young people enter the market each year. Thus, to absorb this labor mass, a growth of 4% is needed.

Both former MEF heads maintain that the country has serious governance and State management problems. In that sense, Castilla was critical of Congress, which does not legislate for the majorities, but rather thinking about their interests.

Inflation

Velarde gave a perspective on the rising prices of products in the basic family basket. He maintained that inflation worldwide has been declining. In Peru it is in a range of 5.6% and for next year it should continue to fall, but El Niño could delay this process due to low production in the field, which can already be seen in lemons, whose prices rose significantly. remarkable.

The word

Alonso Segura, former Minister of Economy

“We had a bubble of extremely favorable conditions, but we have returned to our real growth capacity of 2.5%; that figure is insufficient to meet the demands of the population.”