READ ALSO: SNI rejects that authorities “invoke citizens for political confrontation”
He asserted that the recessive forces come mainly from the external front, given the slowdown in economies such as the United States, China and Europe. This has a negative impact on the international price of the metals that Peru exports and, therefore, this would have consequences, in general, on exports. While, on the local side, Burneo warns of a “particularly conflictive” political situation as well as monetary and fiscal policies that “have clearly operated in the direction of cooling the economy.”
The minister’s diagnosis ends by stating that the situation described justifies a reactivation plan that revolves around fiscal policy.
Figures and evidence
Technically, a recession mainly implies the drop in economic activity for two consecutive quarters and that this spreads to other sectors through lower consumption and production, according to Víctor Fuentes, principal economist at the Peruvian Institute of Economy.
However, this has not happened. “On the production side, the seasonally adjusted GDP registered a quarterly growth of 0.7% in the first quarter and 0.1% in the second. This result, in fact, confirms that the economy has slowed down as a result of the impact that inflation has had on items linked to consumption, and due to the stoppage of mining production”, he pointed out.
That is why for Luis Arias Minaya, former head of Sunat, there is no risk of recession today. “The minister is in charge of completely deflating expectations and this is in order to enter a stage of greater public spending,” he said.
However, he did consider that today there is a risk of a slowdown. “Slowing growth is very different from starting to fall two quarters in a row. The numbers are not showing that. The non-primary GDP in the first semester has positively exceeded expectations. The second semester is going to be more difficult, but I don’t see that risk,” he added.
factors
Jaime Reusche, Vice President of Moody’s, explains that the current growth forecast for the Peruvian economy is 2.5%. “We did get a bit of a surprise on the upside from some of this year’s growth results. We were looking at the possibility of even adjusting the growth forecast a little higher. However, we want to wait to see what indications of economic activity there are in July,” he said.
Thus, the possibility of a recession is difficult for the current year, but the risk rises in 2023. “It is difficult for the Peruvian economy to fall into recession this year, but it becomes a little more likely next year depending on what is happening globally,” he said.
Reusche adds that the situation of the US economy is still uncertain, so it is difficult to make projections about the magnitude of its slowdown. “Meanwhile, in the Chinese economy there are clearer signs of slowdown. There is real concern that it will slow down into the rest of the year and that will weigh on global demand and commodity prices and possibly the Peruvian economy,” he stressed.
MIRA: El Comercio and Apoyo will hold a debate on reform of the pension system
effective responses
For Luis Miguel Castilla, executive director of Videnza and former Minister of Economy and Finance, the answer to the slowdown in the economy lies in recovering business confidence.
“What has stopped is private investment due to the completion of projects like Quellaveco and because the environment remains pessimistic due to the government’s measures and the entire political issue that afflicts us”he argues.
In his turn, Elmer Cuba, a partner at Macroconsult, considered that fiscal policy loses reactivating potential in a context of pessimistic expectations.
“One way to break this state of affairs would be to jointly repeal the labor regulations that have made the companies leave the CNT. That has never happened. That the issue of outsourcing and strikes be reviewed outside of the list of claims. That would help gain credibility,” he added.