“Our growth for this year, with a dose of optimism, is 3.7% to 4%,” the Minister of Economy recently said. Economy and Finance (MEF), Jose Arista. This excess of enthusiasm is dissipated by the official figures. According to the latest Multiannual Macroeconomic Framework (MMM) 2025-2028, there will not be more than 3.2% growth in the next four years.
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For 2024, for now, the projection has been modified upwards, going from 3.1% to 3.2%. According to the MMM, the advance will be supported by the recovery of domestic demand, driven by investment in projects infrastructure and minerswhich “will create jobs and increase private consumption.”
“In the second half of 2024, the economy will consolidate its growth due to the greater dynamism of domestic demand and exports, with favorable financing conditions, improved expectations of economic agents and a favorable international environment. In addition, the measures implemented by the Executive powerwithin the framework of the delegation of powers, will contribute to promoting the reactivation of the economy,” the document reads.
However, it is noted that there are some risk factors that could affect the recovery dynamics, such as the “slow reduction of the inflation”, which would cause a delay in the reduction of monetary policy and financial system interest rates.
Meanwhile, the intensification of the La Niña phenomenon is another factor and would affect agricultural production aimed at the domestic market of potatoes and corn, which impacts food prices, thus affecting the most vulnerable families.
Social conflict, citizen insecurity and greater political instability are also considered factors that could affect recovery, mainly due to the negative impact on sectors such as mining and transportation.
For the Fiscal Council, the projection for this year is “reasonable”, but it would be due to transitory factors, such as the expected statistical rebound after the negative elements that affected the economy in 2023, as well as the temporary boost to private spending that would generate greater liquidity, as a result of the release of funds from the AFP and the CTS.
He also pointed out that the projection of 3% on average for the period 2026-2028 will be a major challenge due to lower productivity and human capital.
In this regard, he considered that medium-term risks include the continued postponement of important mining projects and the delays that projects executed under the public-private partnership modality could suffer due to the lack of concrete schedules.
PRIVATE DISBURSEMENT
According to the MMM, the private investment will grow by 2.5% this year after a fall of 7.3% in 2023. However, to date this indicator has not taken off.
Data from the Central Reserve Bank (BCR) revealed that in the second quarter of the year this disbursement registered a fall of 0.2% due to a greater decrease in residential investment (-9.8%).
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However, mining investment did increase by 3.4% due to higher placements by Compañía Minera Buenaventura, Antamina and Minera Las Bambas.
“Three-month economic expectations have improved, but remain on average in pessimistic territory,” the BCR said.
DATA
-For this year, the fiscal deficit is expected to be 2.8% of the gross domestic product (GDP).
-Private consumption grew 2.3% in the second quarter due to higher employment growth.
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