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MEF updates the GDP projection in 2024 to 3.1%, but will break the fiscal rules

MEF updates the GDP projection in 2024 to 3.1%, but will break the fiscal rules

The Ministry of Economy and Finance (MEF) updated the growth projection of the Peruvian economy for this year to 3.1%, from the 3% forecast in the Multiannual Macroeconomic Framework 2024-2027, published in August 2023.

At the end of the first quarter of 2024, the MEF’s Macroeconomic Projections Update Report (IAPM) attributes this development in GDP to “an increase in exports, investment and private consumption.” In 2023, the economy fell -0.6% due to the recession.

Private investment in 2024 would return to a positive growth path and would register a rate of 2.4% in 2024, favored by the recovery of mining and non-mining investment.

“Private spending will be favored by the improvement in the confidence of economic agents, the convergence of inflation to the target range – which would facilitate the reduction of interest rates – and greater availability of liquidity,” states the MEF.

Exports would grow 4.5%, driven by traditional shipments of copper and fishmeal, and mainly non-traditional agro-export products.

“Exports will be favored by the improvement in supply from primary sectors affected by the El Niño Phenomenon (FEN) such as fishing and agriculture, and the increased mining production of copper, molybdenum and silver,” the document states.

However, the country will break fiscal rules to access this 3.1% growth and the deficit is expected to reach 2.5% of GDP in 2024 (it should not exceed 2%), with a gradual reduction in following years until reaching 1% of GDP in 2028.

In the 2024-2027 projection horizon, Peru’s GDP growth (3%) would be one of the highest in the region, surpassing countries such as Colombia, Chile and Mexico.

Source: Larepublica

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