Following a May that saw a decline in business expectations regarding the economy, hiring and investment in both the short and long term, the Central Reserve Bank of Peru (BCRP) reported a more stable outlook for June.
Although the corporations surveyed by the issuing body have improved their perspectives on the future of GDP, their sector, situation, demand, hiring and investments – whether for the next 3 or 12 months – as far as their current situation is concerned, the horizon is not so auspicious.
It is worth clarifying that the issuing body in its survey of business expectations establishes that if a criterion is below 50 points, it is negative; and if it exceeds it, it is positive. Thus, focusing on the present of companies, estimates regarding business, expected demand, purchase orders and days of unwanted inventory remain pessimistic (see table).
By sector, construction sector entrepreneurs maintain all criteria regarding their current situation in the negative. Manufacturing follows this line —except for the criterion “current business situation.” Sales in mining and hydrocarbons and expected demand also fell back into pessimistic territory.
Substantial improvement?
Hugo Perea, chief economist at BBVA Research, says that we are witnessing an incipient recovery in business confidence, but there is not enough political stability to prolong this improvement and therefore it is not enough.
“Short-term confidence is returning to the optimistic range and 12-month confidence has had a strong rebound. Regarding the current situation, the bulk has moderated or retreated, possibly due to the slower growth in June compared to what was seen in April and May, when GDP would have exceeded 5%,” he commented to La República.
Meanwhile, Daniel Hermoza, president of Mypes Unidas del Perú, maintains that the increase in fishing and agricultural production—158.40% and 23.69% in April, respectively—has generated a “small wave of sensation” that directs us toward a more appropriate path.
Despite the auspicious interpretation of the correction drawn up by the BCRP, Hermoza points out that it is not so much a response to the good judgment of Dina Boluarte’s government, but rather to the temporary abandonment of political scandals. The Rolex case and the alleged illicit debt of President Boluarte, for example.
“There are important programs that have not been implemented for 16 months, such as Compras a Myperú. Minister González (of Produce) should realize that they are not responding to the circumstances. There are also no sectoral commitments with wineries or service SMEs,” explained to this news outlet.
Perea adds that we cannot speak of a genuine return to business confidence – which has fallen into negative territory since mid-2021 and is struggling to move away from the 50-point threshold – as long as political controversies do not dissipate, both at the level of the Executive and Congress, the latter of which he accuses of promoting populist measures that generate “noise and prevent the consolidation of a stable environment for business.”
It should be noted that Fitch Ratings maintained Peru’s rating at negative and reduced its outlook to negative, while S&P, despite leaving the outlook stable, lowered its assessment of the national economy by one grade.
The rating agencies applied this slap on the wrist, claiming that the Dina Boluarte regime has a “weak mandate” and is maintained “thanks to the support of right-wing parties” despite the lack of consensus and timely decisions that put fiscal stability at risk: anyway, this year the rule will not be respected and we will have a larger deficit.
What do business leaders expect regarding GDP and the exchange rate?
This year, both the BCRP and the MEF estimate that the Peruvian economy will close at just above 3.0%, and the businessmen surveyed by the issuing body are going in that direction: they estimate a rate of between 2.6% and 3.0%. For 2025 and 2026, one of between 2.7% and 3.0%.
Julio Velarde, president of the BCRP, has acknowledged that the projection they have on national production is biased upwards and the unblocking of projects such as Tía María gives rise to the addition of other initiatives that will boost GDP.
Regarding the dollar, the survey reveals that economic agents expect it to end between S/3.76 and S/3.79 for this year, and for the next two, between S/3.75 and S/3.80.
Source: Larepublica
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