Opinion: Business confidence collapses in Peru

By Luis Benavente

RIO DE JANEIRO, BRAZIL – (Opinion) Cumulative inflation in Peru has reached 8.62%. It is the highest level in 24 years since the El Niño phenomenon destroyed the Peruvian economy in 1998. In other words, the negative impact of Pedro Castillo’s government on the country’s economy is as devastating as the 1998 El Niño phenomenon.

And this is only the beginning, the result of the first year of Castillo’s government. If things continue this way, the country will be on its way to a sort of “Venezuelanization” or destruction of the economy, business, employment, and total control and destruction of institutions in the political sphere.

That, which is already reflected in a very alarming way in the inflation rate, is happening with all the indicators there are and will be.

Such is the case of the business confidence index, prepared monthly by the Central Reserve Bank of Peru (BCRP), which in the last 18 months shows the lowest levels in two stages.

The first one, in August and September 2021, as soon as the Castillo regime began, with Guido Bellido in the presidency of the Council of Ministers, a stage in which the administration did not generate political or economic confidence, appointing ministers with terrible records who did not hide their sympathy with terrorism, among them a veteran guerrilla who was appointed Minister of Foreign Affairs.

The second, last month (April 2022), as a consequence of a progressive process of actions against business and investment by President Castillo and his government, a process of economic instability sponsored by the government, accompanied and aggravated by the political instability, also created by the government, especially by the insistence of a constitutional change that only seeks the promotion of statism and the end of freedoms, among them, economic freedom.

As a result, business confidence has collapsed and is at its lowest levels in the last 18 months. In Peru, the economy, investment, and employment are at a standstill or decline. There are no conditions for investment. Business confidence has vanished. The political and economic environment is very unfavorable. There are no expectations of stability and growth. Consumption and investment are not encouraged. The future is dark.

The business confidence index is an indicator that measures the perception that business people have about the current state of the economy and their expectations regarding its evolution in the future. When the index is above 50 points, confidence is in the optimistic range. When it is below 50, it is in the pessimistic range.

The Central Reserve Bank obtains it through a systematic survey applied to a sample of the companies with the highest turnover in each of the sectors of economic activity.

With information from Infobae