The Peruvian economy during the first year of Dina Boluarte’s government registered its worst rate in just over three decades, not counting the pandemic (-0.6%). For 2024, a rebound of 3.1% is estimated – with a certain upward bias, by the Ministry of Economy and Finance (MEF) and various institutions – but it would not allow mitigating the ravages of 2023 such as the increase in poverty – in the words of Minister José Arista himself – which affected practically a third of the population.
A few days before his second address to the nation, in the framework of the 203rd anniversary of the declaration of independence from the Spanish crown, specialists believe that there are more doubts than certainties about the management of the economy after the recession.
Order is urgently needed
“There is little expected. Let’s say there are very modest expectations. She lacks leadership (from Dina Boluarte). What is desirable is to call the attention of Congress regarding the approval of laws that have a strong impact on the economy, especially on the fiscal aspect, as well as the perforation of meritocracy or worrying counter-reforms,” IEP researcher Carolina Trivelli told La República.
However, Trivelli recalls that many of the initiatives passed through the Executive Branch without being observed, which demonstrates the docility with which Boluarte and his leadership act, as well as their lack of openness in the face of questions raised by regulatory bodies, the Superintendency of Banking, Insurance and AFP (SBS), the Central Reserve Bank (BCRP) or the Fiscal Council, among others.
An example. Despite criticism of the increase in the fiscal deficit target, the Boluarte administration decided to raise it, thereby giving free rein to spending more money than there is.
Manuel Carpio – Rivero, professor at Pacífico Business School, warns that “the lack of coherence and competence” in managing the country keeps the economy in a lethargic state. A clear example is the slight rebound estimated for private investment —which accounts for 80% of the total— after two years of negative growth: barely 2.3%.
The latent political instability, reflected in the high rate of presidential and congressional disapproval, could cost the country the loss of its investment grade – adds Carpio-Rivero – who considers it a slap in the face that Fitch Ratings has maintained its rating at negative and also reduced its outlook together with S&P, which lowered Peru’s credit rating to BBB-, placing us one step away from speculative grade, which worsens the outlook for the entry of foreign capital into the local market.
“With instability, investment stops. The government is not giving the necessary signals to reverse the situation. This is not just an academic’s interpretation, but also a concrete fact (in relation to what S&P and Fitch Ratings dictate)”he added.
Beyond the field of statistics, the palpable effect of the problems that continue to drag on is the increase in poverty: 29% of Peruvians do not have enough to cover the basic consumer basket – prepared by the INEI – and not to mention the multidimensional one, which “is unrelated to GDP growth,” according to Trivelli, who estimates that it will stagnate in 2024 at the aforementioned 29%.
The blind optimism of the rebound
A few days ago, MEF head José Arista said that Peru’s GDP will grow beyond 3.1% —”even by a few points more”— based on the rates of 5.28% and 5.04% seen in April and May —the highest since Boluarte assumed the presidency— but, as reported by this newspaper, these ratios may reflect the poor consistency of growth.
The director of Phase Consultores, Juan Carlos Odar, stressed that thanks to industrial fishing, due to the dissipation of climatic anomalies, fishing reached triple digits (329%) after falling 70.60% in May 2023. Now, the advance of the fishing and manufacturing sectors, especially in fish processing and preservation, contributed 2.48% to the monthly growth and without them, the May rate would have been 2.56%.
Carpio-Rivero concludes that the bonanza seen in April and May “does not provide the necessary signals” to speak of auspicious growth, and on the contrary, reflects the “inability” of the ministers surrounding Boluarte to steer the economy since programs such as Con Punche did not bring the appropriate impact.
“It is not the president’s merit (the rebound in April and May) but it has been due to the very low comparative base,” ended.
Source: Larepublica
Alia is a professional author and journalist, working at 247 news agency. She writes on various topics from economy news to general interest pieces, providing readers with relevant and informative content. With years of experience, she brings a unique perspective and in-depth analysis to her work.
