Business confidence sank with Pedro Castillo

10 years ago, Peru had business expectations that far exceeded the optimistic range (above 50 points, according to the survey carried out by the Central Reserve Bank). Progressively, expectations were receding due to various factors, although without going into pessimistic territory (below 50 points). With the pandemic, the indicators had a sharp drop, but they recovered; however, with the management of Pedro Castillo everything was for the worse.

For example, the three-month expectation index of the economy had 64 points in November 2012, in April 2020 it fell to 9.1 points, but, by October of that year, it was already at 50.2 points. However, as of November 2022, it stood at 37.9 points.

The same happened with the purchase order index compared to the previous month, which a decade ago had 59 points, in 2020 it fell due to the pandemic, but towards the end of that year it stood at 51.3 points, and today it is at 43.6 points.

Regarding the sector’s expectations for three months, in November 2012 it had 62 points, in a similar period in 2020 it stood at 52.8 points and last month it had 42.8 points.

EXPLANATIONS

The chief economist of the Peruvian Institute of Economy (IPE), Víctor Fuentes, indicated that for the past 10 years, political problems and uncertainty have led the indicators to decline.

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“We have not been able to give investors confidence. On the one hand, a favorable climate for reforms and, on the other, legal certainty, ”he explained.

Likewise, he assured that the main component of the drop in business confidence is internal. In the case of the external panorama, what has benefited the country, at least this year, has been the international increase in mineral prices, which were not taken advantage of due to the conflicts.

For his part, the former president of the Lima Chamber of Commerce (CCL) Peter Anders considered that a problem that generates business distrust is the corruption that is present in the different institutions of the country.

“Most of the last presidents are investigated for corruption. This last government was the worst and it is logical because of the quality of people with whom he surrounded himself. With field professionals things could be different, ”he explained.

In this sense, he explained that professionals are needed in the public sector, “a probable government capable of bringing together the right people.”

In addition to the management on duty, the former representative of the Chamber pointed out that it is also in the hands of Congress to contribute to giving confidence. To do this, he explained that it is necessary to stop issuing populist regulations that end up affecting, for example, the labor market and the rules of the game.