RIO DE JANEIRO, BRAZIL – Peru has once again proven its macroeconomic strength built in recent decades with fiscal responsibility and discipline, which allows it to face one of the strongest global shocks of the current century and —in turn— is the basis for a faster recovery in 2021, global investment manager BlackRock has affirmed.
Although the national economy had been growing at a rate of 2.2% in 2019, and further expansion was expected for this year, nothing foreshadowed the emergence of the lethal coronavirus pandemic, which stopped the productive activity at first.
The second quarter of the year was the most difficult, but —following the gradual economic reopening— the projections improved.
Thus, the Central Reserve Bank (BCR) revised upwards Peru’s GDP rate estimate from -12.7% to -11.5% for this year, while it was raised from 11% to 11.5% for 2021. For 2022, it projects an economic growth of 4%.
External markets
These better outlooks are based on the recovery of international markets —especially China and the United States— which acquire Peru’s export products. This is linked to the expectations of improved consumption in their economies given the start of vaccination against COVID-19.
BlackRock’s Chief Investment Strategist for Latin America Axel Christensen refers to a favorable external scenario for Peru, according to a story published in the Official Gazette El Peruano.
“Looking forward I see that there are sectors in which the Peruvian economy has many meeting points with global demand, particularly China. In that sense, we see that the outlook for the coming year is positive,” he stressed.
According to the Central Reserve Bank, metal mining GDP in the country will go from contracting this year (-14.1%) to registering an expansion of 14.4% in 2021 and then moderating to an increase of 4.8 % in 2022.
The entity also estimates that private investment will decline 20% this year. However, for the following year, it estimates a growth of 17.5%, supported by a 29% expansion of mining sector investment.
In this sense, it should be noted that Energy and Mines Minister Jaime Galvez announced that mining investment in Peru will close 2020 at US$4.2 billion, adding that it will increase to US$5.4 billion in 2021.
Higher expense
Another factor that will boost the Peruvian economy next year will be increased public investment, as pointed out by Economy and Finance Minister Waldo Mendoza.
Public investment grew 26.6% in November 2020, after having registered a 74% drop last June, thus already showing signs of a robust recovery.
Last April, Moody’s Investors Service Vice-President Jaime Reusche stressed that “Peru was the emerging country with the greatest fiscal response” to address the emergency and the economic impact caused by the coronavirus.