2024 will bring an economic rebound that is insufficient to address social emergencies

The recession will leave us with a hangover so long that it cannot be compared to the one that welcomes millions of Peruvians in these first hours of the new year. Although the official data for 2023—by the INEI— it will only be known in February, it is expected that GDP fell between 0.6% and 0.3%; and by 2024 we would have a rebound that would barely exceed 2%according to specialized entities.

Just as the numbers undermined the optimistic speeches of the Government of Dina Boluarte, it is now warned that, even with a moderate El Niño phenomenon, the country’s production for the current will not be enough to close the gaps, despite the rebound of 3 % predicted by the Ministry of Economy and Finance (MEF) and the Central Reserve Bank of Peru (BCRP).

Julio Velarde, president of the BCRP, expects that in the first quarter of 2024 the economy will rise 0.7%, and thus progressively up to 4.8% for the fourth quarter. In the wake of a less aggressive El Niño, he notes that agriculture and fishing would have a vigorous recovery.

Meanwhile, Minister Alex Contreras, despite his call for calm, barely mentioned that the rebound will occur “mainly in the second half”; and he plays his cards for the recovery of private investment – despite the fact that it has been negative for five quarters and ends 2023 with a contraction of 7.3% -. The latent business pessimism complicates the horizon.

More poverty and hunger

“It won’t be enough at all. I don’t even know if it will reach 3%, because to do so you have to have some optimism. There has to be a little more political stability to recover (business) expectations. Besides, this rebound is going to be compared with a very bad 2023,” former Economy Minister Luis Miguel Castilla commented for La República.

The executive director of Videnza points out that the GDP It is more likely to be 2%, and one of the most tangible effects of this limited variation will be the increase in precarious employment, since only high growth rates feed into labor formality. He is not stingy with the benefits of the 3% that the State provides, but he considers that it is not the threshold to which one should aspire.

It is worth noting that approximately 9 million Peruvians are underemployed, either due to lack of hours (visible) or lower than average income (invisible).

From the Economic Studies Area of ​​the BCP and the BBVA Research They emphasize that the rebound has “a significant level of uncertainty” and will fall short of containing the increase in poverty. It should be added that we reach 2024 with almost 10 million Peruvians in destitution due to lack of income to cover their daily needs (monetary poverty).

Change priorities

Carolina Trivelli, researcher at the IEP, argues that the expected rebound will occur on autopilot and will only prevent things from getting worse, but it is not a reason for relief, since problems such as food insecurity must be addressed immediately: 11 years ago, 17% of Peruvians recognized who ever ran out of food in the last three months and in 2023 the rate rebounded to 57%. “It’s something brutal. “It is a very serious situation not seen in the last 20 or 30 years,” said the former Midis owner.

Trivelli is a fierce critic of the political decisions of the Executive, to the point that she believes that the resources of the Public budget 2024 does not bring anything new and repeats a sterile recipe, since poverty has mutated and must now be attacked considering multidimensional aspects: geographical location, access to basic services, employment and education, etc.

In his opinion, it is urgent to improve family income, but not through bonuses—because fiscal accounts “are difficult and there are no clear targeting criteria,” he adds—but with the expansion of temporary employment generation and economic inclusion programs. such as Compras a Myperú, A Comer Pescado or Haku Wiñay.

MEF policies did not measure up

Hugo Perea, chief economist at BBVA Research, maintains that the MEF plans have not obtained the expected results and, due to their nature as a public impulse, have hardly helped to prevent the economic slowdown from being greater because, if they had not been applied, the GDP would be lower than the -0.5% expected. Beyond removing ministers from the Otárola cabinet, he aims to set new priorities.

He recognized measures such as the simplification of the tax regime for a sector as atomized as the mypes – although we will have to wait until March for Congress to address it -, and for the second half of the year, after the global cyclical slowdown, the prices of minerals would increase again, such as copper, which represents an opportunity to capture more income, considering that we are one of the most important copper producers in the world. It is worth noting that the MEF is preparing a permit flexibility package to unblock mining projects and will reduce the rate of contributions to Essalud for agro-exporters.

APEC: we must give a better image

This year, Peru will host the summit of the Asia-Pacific Economic Cooperation Forum (APEC), a bloc that brings together 21 economies, including the United States, Russia and China, and will coincide with the inauguration of the Chancay megaport, which It will make Peru the hub of international trade, lowering costs and reducing time for the countries of the region in their export efforts.

Here, Perea and Castilla agree that the effects of projects like Chancay—whose investment exceeds S/891 million—“are felt over time,” and although the eventual arrival of the Chinese president, Xi Jinping, to APEC in The framework of the opening of the port hub would place us in a showcase, with the current institutional deterioration little or nothing can be done, and this requires a Congress and Executive Branch independent of political scandals. Recent events seem to warn us otherwise for the new year.

Hunger worsened in 10 regions

In his recent report of Global Hunger Indexcarried out by Alliance 2015, warn that in ten regions of our country hunger worsened due to inflation and the economic slowdown seen in 2022.

Kaspar Schmidt, director of Helvetas Perú, maintains that the political factor complicates hunger and generated the loss of purchasing power of the population, to such an extent that the positive effects inherited from the rebound seen in the bicentennial—after the 2020 recession—were erased. . He acknowledged that he was “very optimistic” in the projections.

Reactions

Carolina Trivelli, former Minister of Development and Social Inclusion

“We need that along with the rebound there are measures that focus on families that worsened their economic situation. Extreme poverty in the rural world is very high. It has risen to almost 15%.”

Luis Miguel Castilla, former Minister of Economy and Finance

“The base scenario is 2%, and even 3% will be insufficient to close the gaps. It will be compared to a very bad year and when El Niño dissipates we will see a recovery in fishing and agriculture.”