The Peruvian economy is slowing down and business confidence remains pessimistic. For Carlos Olivaformer Minister of Economy, this situation will continue and will have an impact on job creation.
According to the latest BCR survey, most business expectations are pessimistic. What is expected for 2023?
Business expectations are now closely related to the political crisis and the government’s inability to do good management. As long as there is no radical change, it is most likely that they will continue at that level (pessimists below 50 points).
What will be the impact of the presence of Betssy Chávez in the premiere taking into account that she promoted Agenda 19?
I don’t think his presence raises expectations, quite the contrary. Although in the end it is a matter of uncertainty because we do not know if it will last, if they will give him confidence or what will happen to the president. We are in a maelstrom of uncertainty and that makes companies invest the minimum.
Private investment is even expected to fall next year.
The expectations indicator is what is somehow indicating what will happen in private investment. As long as expectations are in the pessimistic range, it is most likely that investment will not grow or fall.
What does this fall imply?
The country needs private investment to grow 8%, 10%, 12%, and if we are around 0%, there will be a big problem in job creation and also in future growth because investment is linked to the country growth.
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From the Executive they blame the lower growth mainly on the international scene.
They are both things, the international situation and the national one. In the Fiscal Council a few months ago we said that the international situation is complicated and they did not pay much attention to us. They are just listening to us. But there is also the internal part, which no one in the government likes to admit, but it is very clear that expectations are linked to the internal panorama.
Will Impulse Peru have an impact on GDP?
If it is going to have an impact, it will be very marginal because the underlying issue is trust. Imagine that you have a very productive seed, but if you throw it on a carpet, it will not grow, you need to put it in fertile soil for it to flourish. Something similar happens here, you can take measures, but due to the issue of trust it will not have the expected impact. The measures are given to increase investment and the investment is not given due to a matter of mistrust.
At the current growth rate, how long will it take us to reach the poverty levels of 2019 (20.2%)?
It can take several years. The last official data was 25.5% in 2021, and in the best of cases in 2022 it will be around 24%, or even 25%. We are far from returning to the pre-pandemic level. If the economy grows below 3%, most likely we will stagnate between 24% and 25% until GDP growth grows at rates above 4%.
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Carlos Oliva assured that by 2023 a negative impact on tax collection is expected due to lower mining prices.
“If we continue with the seizure of mining companies, yesterday Las Bambas, today Inmaculada, that could definitely affect Income Tax,” he said.
“Next year a sharp drop in mining investment is expected and there are no expectations that it can advance in the coming years. With the problems that are not solved, and to which only a patch is applied, recovery is difficult”.
