The economist Elmer Cuba He takes stock of the situation and affirms that, if President Jerí leaves office, he does not perceive important economic effects.
Could what has been happening on the political front be having any impact on investment decisions?
Private investment grew almost 10% last year. Today that speed will not be able to be sustained. We expect a rate closer to 4% this year, driven by two reasons. One, a good international context: commodity prices are at their highest in more than 70 years and this year is better. Copper is even going to break last year’s record.
What is the second reason for your expectations?
On the political side, the first three or four candidates have a strong attachment to the economic model. So, it is not expected that someone from the left can even make it to the second round. That’s as of today. Furthermore, business expectations from the 12-month Central Bank survey continue to have a very optimistic projection and in 12 more months there will be another government.
For those of you who carry out consultancies, is there demand for services provided to companies at this time?
Yes, there is demand. The fact that Boluarte has lasted has been good for the economy. And Jerí is seen with a parenthesis. In reality, all eyes are already on the elections, in which the winner is expected to be stronger than Boluarte. And that’s not difficult. Boluarte had no party and was supported by 3% of the population. The winner will start with 50%, at least. From there it can fall to 20%, but 20 is more than 3. So, the next president is expected to last, to have a party and to be more popular than Boluarte. If with Boluarte we grew 3%, consequently, expectations are good.
What sectors could be quite expectant for investment?
A relaunch of much mining investment is expected, helped by high prices and the expected political stability. Good performance is also projected in construction.
If what he points out prospers, that pulls employment. What is the expectation?
What is happening is that, with a 3% growth in the economy, employment is being given only to the formal educated sector, which is what, for example, is behind the automobile import boom. Car import growth has soared to almost 50% in December. It’s a crazy thing; I have never seen those expanding digits. There is also the relaunching of the purchase of apartments and, in general, capital goods. They come strong.
Unfortunately, employment in the less educated sector has not yet recovered its pre-pandemic numbers. It is like a duality that has effects on popular unrest. And the loser in this whole story is youth employment. He is in the worst of all worlds. We need two things: to grow faster and certain explicit policies for young people.
Is Peru still a stable economy despite the constant political noise?
The political noise, really loud, occurred with PPK and Vizcarra. When Vizcarra closed Congress, then it was vacated, Castillo came in, Castillo left… That was terrible. Rather, Jerí’s latest transition has even been welcome. Even if Jerí falls this or next week, I don’t see important economic effects; almost almost zero, really.
Because?
Because eyes are now on what the candidates say. As the weeks go by, what López Aliga, Keiko or the left can say will be more important than what a potential replacement for Jerí may be.
The government plans have already been presented. How can the public be receiving it?
The reception is positive because the plans, for the most part, respect the model. The main candidates support it, except for the extreme left, Lescano, López Chau and, especially, Antauro or Cerrón, who do seek structural change.
This is reflected in the expectations of businessmen in the Central Bank survey: they are seeing good terms of trade and that, for now, the right could put two candidates in the second round, and both are more or less orthodox. So, whoever it was, there is no such problem for now.
In the mining field there were no large projects. However, the price of copper continues to rise. Could there be more investments in mining?
There are no large ones, but there are medium-sized ones like Zafranal and Tía María. Those do activate; They are projects of between US$1,000 million and US$2,000 million.
What are expected to be the drivers of the economy for this year?
Basically, private investment, which would grow a little more than the product, and consumption. Consumption especially among the middle classes, who are benefiting from this somewhat tight labor market.
What can you expect from the exchange rate?
The dollar is expected to continue falling. If we are going to have the best terms of trade in history, it is normal. The Central Bank is now taking advantage to accumulate reserves; If it wasn’t intervening, the dollar would be lower. On Thursday, the BCR bought US$400 million and the day before yesterday US$400 million. In recent weeks it has purchased roughly $2.5 billion. The intervention is strong.
The fundamentals would indicate that the dollar should fall, but it is not falling that much because the BCR is taking advantage, as is natural and correct, to accumulate reserves. It’s better to have reservations now, especially in a more uncertain world with Trump.
Can El Niño Costero represent a danger?
Not until now. It is within the ranges of neutral and perhaps weak Niño, and that does not have major effects on the economy yet.
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