Moody’s expects the Peruvian economy to rise 13.5% despite the political noise

This content was published on November 30, 2021 – 19:23

Lima, November 30 (EFE). – Vice President of rating agency Moody’s, Jaime Roche, estimated this Tuesday that despite political instability, the Peruvian economy could grow by about 13.5% in 2021 and maintain the forecast of 3% by 2022, when less dynamic private investment is expected.

“Inside Latin America,” Reusche said at a press conference after the “Inside Latin America” ​​event.

The analyst in charge of Peru’s rating emphasized that these optimistic estimates are a “complement” to Peru’s “robust” economic model, which continues to grow despite the “lack of control” and “persistent swing” practiced by the left-wing government. Pedro Castillo presents.. “Their Public Policy Priorities”.

During the conference, the economist said that it is this “strength” of economic fundamentals that is able to anticipate good prospects even when the country is going through this “political onslaught”, which in other economies could have led to deflation, that prompted Moody’s to maintain a stable outlook. The sovereign debt rating, whose credit rating was downgraded last September from A3 to Baa1.

On the one hand, Reusche acknowledged the efforts made by the Ministry of Economy, headed by Pedro Francke, to clarify its economic and financial guidelines, with tax reform as a main objective, and measures to mitigate the potential effects of the new variants of the virus. – 19 and strive to continue public spending.

On the other hand, he criticized that other examples of executive power lack “clarity and ability to formulate coherent policies.”

In this sense, he repeatedly referred to the recent controversy unleashed by Prime Minister Mérza Vásquez’s announcement regarding the closure of four mining units in the south of the Ayacucho region: “The government has retreated, that is, positive, but it has hit business and economic confidence.”

Roche ruled that although “a very abrupt change in the economic model seems unlikely today” in Peru, economic agents and financial markets “are aware that political instability will be constant in this government”, in addition to the ongoing confrontation with the legislature, which has introduced Just had a petition to impeach the president.

The economist stressed that all this volatile political environment will affect the economic outlook and private investment that is expected to shrink next year, except for private investment in mining, which will continue to expand.

In addition, he added that private investment will also be hurt by the deterioration of the external context as a result of the slowdown in the Chinese economy and reduced monetary stimulus from the United States.

On the domestic front, the analyst emphasized that the main risk that could lower the stable outlook of the rating “has the first and last name which is the Constituent Assembly”.

Although acknowledging that the country today appears far from progressing down this path, Roshi cautioned that the idea “has not faded away yet” and that if the port is reached, the prospect will respond “immediately”.

The “LatAam Peru” event presented a series of virtual panels where Moody’s analyzed the credit panorama of the Andean country on sovereign risk, corporate and banking sectors. EFE

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