The National Society of Industries (SNI) reduced its growth projection for Peru’s Gross Domestic Product (GDP) from 4% to 2%, due to the slowdown in the economy, the fall in public investment and the decline in private investment which could fall 8% this year, affected by political noise.
“More than US$ 5,000 million will not be invested in the private sector if we consider the period between August 2021 and this year, with which we would be failing to create 500,000 jobs that are needed for this year”affirmed Antonio Castillo, manager of the Institute of Economic and Social Studies (IEES) of the SNI.
He specified that national production remains below the figures of the last 11 months, despite the fact that the price of copper and other metals are at historical highs. However, in February, economic activity grew 4.9% compared to February 2021, influenced by a statistical component, and reflected in the sectors of commerce, services such as accommodation and restaurants, manufacturing, and the agricultural sector.
“If the Government encourages private investment and solves the social conflicts of mining and agro-export, Peru could return to the path of growth. However, we see that unilateral measures are being approved, such as the elimination of outsourcing, which put more pressure on small businesses and can condemn them to informality”said the executive.
inflation and poverty
Regarding growth prospects for 2022, Peru is below countries such as Colombia (5.8%), Argentina (4%), Uruguay (3.9%) and Bolivia (3.8%). However, it exceeds Chile (1.5%), which is going through a process of political reform through a Constituent Assembly, Castillo said.
Currently, 1.7 million Peruvians subsist on S/ 191 per month in extreme poverty; and 9.8 million Peruvians subsist on less than S/ 360 per month in poverty. Similarly, inflation rose to 6.82% in March 2022, influenced by the increase in prices of food, energy and imported goods, the IEES said.
Informality
Between 2019 and 2021, labor informality went from 72.7% to 76.8%, reaching figures similar to those of 2010, which are the worst in 11 years, reported the SNI.
According to the union, this situation could worsen if technical and consensual policies are not applied that encourage the formalization of businesses, especially in the MYPE sector, where more than 99% of the country’s companies are located.
There is still a deficit of more than 1 million suitable jobs to reach the pre-pandemic levels of 2019, despite the recovery of suitable employment in 2021, due to the reactivation of economic activities.
Meanwhile, underemployment – mainly informal employment – has grown since 2019, from 7.5 million underemployed Peruvians to more than 8.5 million people. “We are reaching the same levels of total employment as in 2019, but due to the increase in underemployment and informal employment”he highlighted.