World Bank predicts GDP growth of just 2.9%

The latest report from the World Bank, which will be public from today, June 11, presents a slight upward revision of the Peruvian economy in 2024. Thus, it estimates an advance of 2.9%, when in April it forecast 2.5%.

“Peru will grow, according to projections, 2.9% in 2024 and 2.6% in 2025“, since the decrease in inflation and cuts in the monetary policy rate will boost private consumption,” said the multilateral entity, which also calculates that Latin America and the Caribbean will grow 1.8% in 2024.

Eduardo Recoba, chief economist for Latin America and Spain at iFOREX LATAM, puts the dots on the i’s and specifies that the WB projection takes a very low base (2023 GDP was -0.6%); Therefore, the growth effect is a statistical rebound, even more so when there are no signs of improvement in private investment.

“It is an adjustment (that of the WB) very attached to a dimension that has to do with the monetary politicswith the reduction of the short-term interest rate of the BCRP,” he explained.

However, Recoba warns that this reduction does not have an impact on commercial banking, since entities do not respond quickly to this drop in rates. “Since the last quarter of 2023, (reference rates) have fallen and we are not seeing any type of rate reduction or campaigns on personal loans. That the WB appeals for a short-term rate correction is extremely weak,” Recoba pointed out.

In that sense, he stressed that although inflation (today at 2.00% year-on-year) is within the BCRP’s target range, this rate operates at the wholesale level, which is why families continue to consume with a price system. rising in popular markets.

“Yes, there is a certain movement towards private consumption, which may be accelerated by the review of short-term rates, but economies like the Peruvian, Chilean or Colombian ones do not rely on consumption, but rather on private investment,” the economist explained. .

Poverty will not be reduced

Growth rates such as those expected for this year do not allow us to reduce the poverty, currently at 29%. This is recognized by the consensus of economists and entities. Rates above 4% do allow this scourge to diminish; For this reason, Recoba points out that poverty, although it will not continue to advance, would remain at the same levels as last year.

Agents predict lower rate at the end of the year

According to the report of the Monthly Survey of Macroeconomic Expectations, May 2024, of the Central Reserve Bank of Peru (BCRP), economic agents predict that GDP would end the year between 2.5% and 2.7% —they differ from the rate 3% of the BCRP and the MEF.

Recoba points out that today we have exports in our favor, currently favored by the rising price cycle of gold (US$2,350 per troy ounce), as well as copper (US$5 per pound).