BCRP: business confidence would recover this year

The latest survey of macroeconomic expectations conducted by the Central Reserve Bank of Peru (BCRP) revealed that business confidence was deteriorating in the last month of 2021.

In detail, of the 18 indicators, only 8 were located in an optimistic stretch, while in the previous month this figure amounted to 9.

Although the expectations of the Peruvian economy for 3 and 12 months improved compared to the previous two months, they remain in the pessimistic section.

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On the other hand, the 12-month investment expectation of a company rose to 50.8 points, continuing in the optimistic section.

Adrian Armas, Central Manager of Economic Studies of the BCRP, pointed out that for several months most of the indicators have been in the pessimistic range and that the evolution has been mixed, since in some months confidence increased and in other opportunities it fell.

However, despite the fact that there is currently low business confidence, the official of the issuing entity projected that this trend could be reversed in the course of 2022.

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“A gradual recovery in business confidence would be expected throughout the year, in a context in which the projection has to be set in a scenario of political and social stability, and a highly favorable international scenario such as the one we have. And, also, what has been very important is the advancement of vaccination, “said Armas during the presentation of the January 2022 Monetary Program.

For his part, from the Ministry of Economy and Finance (MEF) indicated that they continue working to generate an environment of economic growth with fiscal sustainability, promoting public investment through schemes that allow faster and more efficient execution, which will facilitate private investment and generate new growth engines.

Monetary politics

At its last board meeting, the BCRP raised the reference interest rate from 2.50% to 3.00%, continuing with the normalization of the monetary policy position.

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However, the current reference rate is close to a neutral monetary policy position, which according to estimates by the central bank It is 3.5%, a figure that could be reached in the coming months.

“The 3% rate is still at an expansive level, but it would tend to reach a neutral position in the coming months with current information”, Armas pointed.

The decision to raise the reference rate is due to the fact that inflation in 2021 closed at 6.43%, temporarily placing it above the target range.

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The issuing entity indicated that in the first months of 2022 inflation would be moderate, however, from the middle of this year there would be a reduction in the interannual inflation rate, returning to the target range in the fourth quarter of the current year.

Fewer credits are rescheduled

Armas also indicated that there has been a significant reduction in the rescheduling of loans, which shows that there is the ability to pay in companies and families.

Along the same lines, The official highlighted that in recent months there has been growth in microenterprise and consumer loans.

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“The interannual growth of people is even higher than credit to companies by the financial system,” he pointed out.

Finally, he informed that the interest rates of the financial system in national currency are still below the long-term averages.

The data

Impact. The BCRP indicated that the third wave would not affect the GDP growth projection for 2022, since such a scenario was planned.

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Resilience Armas mentioned that the private sector has developed a capacity to respond to a new wave scenario.

Evolution of business expectations