2024 is over, a year in which it is estimated that the economy would have grown around 3.2%. By 2025, although the initial scenario also seems to be one of progress, the chief economist at BBVA Research, Hugo Pereaexplained that the balance is fragile, although he highlighted the growth that would occur in private investment.
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What are the growth drivers for 2025?
Leading indicators suggest that the economy will achieve better dynamism in 2025, which has been reflected especially in the latter part of the year. There is a feeling of improvement in the economy, but with rates that remain discreet. We believe that growth will be supported by an improvement in private spending, especially investment. This is supported by a favorable environment of business confidence that has remained in optimistic territory, as well as by a set of projects that are beginning to mature and that are incorporated into the 2025 forecasts. A third element to consider is an external environment something more challenging with the new United States administration, which has generated a little more uncertainty. Finally, at the local level, there is an element related to politics, because surely towards the end of 2025 we will see the first surveys and we will analyze whether there will be more pro-market candidates or proposals that want to make radical changes with experiments that we have already seen in the past.
2025 has been declared the year of recovery and consolidation of the economy. Is it as bombastic as they make it out to be?
Growth has already been consolidating in 2024. The economy is close to its potential growth level, so there will no longer be a rebound effect, but rather it will grow due to its production factors, technological process and institutional capacity; and unfortunately, in this consolidation the growth is around 2.5%. We have lost contribution on the side of capital accumulation, because investment has been low and we think it will be low compared to the 20 years before the pandemic. This in an increasingly weak institutional environment, where we even see that contracts are not respected by the authorities and generate more uncertainty. Furthermore, the productivity of the economy has been declining. The only way to relaunch this is by strengthening institutions again.
Does that economic consolidation mean growing at rates of 2.5%?
Growing 3.1% or 3.2% was only transitory, because the country’s average growth speed is 2.5%. That is unfortunate, because at one point we had an average speed of 6.5% that was reflected in an unprecedented reduction in poverty. Between 2004 and 2019, 9.6 million Peruvians emerged from poverty, but it was necessary to consolidate that and do something more.
What are the probabilities of an environment of sociopolitical stability, taking into account that the electoral campaign begins in 2025?
It is the scenario in which we assign the most probability, because we see fatigue in the population and lack of leadership. To the extent that there is no leadership, that there is discontent, that there is no clear agenda of protests, we are thinking that the environment of social stability, of relative calm, will be maintained, but it is a fragile balance.
What will be the impact for Peru of Donald Trump’s protectionist policies?
In Trump’s policy there are four main axes that concern Peru. One is greater protectionism via universal tariffs, which will have different implications. Second, a more lax fiscal policy. The third, a stricter immigration policy, and fourthly, a certain disdain towards policies against climate change. The first three are going to generate more inflation in the United States, and that will mean higher interest rates in that country, which will be reflected in a depreciation of the sol. The greater disdain for policies against climate change will affect the price of copper. The strongest concern is around 2026. We do not see the real and significant impact in 2025.
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What is your expectation for private investment this year?
We predict that it will grow between 3.5% and 4%. If there is something to recognize from the Executive during 2024, of the few things that I highlight, it is that infrastructure projects will be carried out under the public-private partnership (PPP) modality, and Proinversión must be congratulated for that. We are also going to see the development of some mining projects that are seeing the light of day. Tía María is the most emblematic; There is also the replenishment of Antamina. On that side, I believe that private investment will have a better result.
Would poverty have been reduced?
We have not made the exact calculation, but there will be a reduction in 2024. In 2024 we have seen a strong slowdown in inflation, a correction in food prices and rather an environment of greater growth. The issue is what comes next. Once the effect of the reduction in inflation has passed and the growth rate remains around 2.5% or 3%, poverty reduction will be more complex.
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