In Peru, the economic recovery remains elusive, leading to a continuous decline in private investment.
Recent data from the Central Reserve Bank of Peru (BCRP) shows a 6.2% year-on-year drop in private investment during the third quarter of 2023.
This downturn marks the fifth consecutive quarter of such decline. The BCRP identifies the reduction in non-mining investment as a key factor.
This sector has seen a downturn due to stagnant business outlooks, which have remained largely pessimistic.
This negative sentiment in business circles is closely linked to the overall decline in investment.
Additionally, residential investment has lost its previous growth momentum. This loss has further contributed to the overall decline in private investment.
When people invest less in housing, it often reflects broader economic challenges.
On the other hand, public investment also experienced a 4.6% fall in the same quarter. This decrease is largely due to lower spending by local governments.
It’s common to see such a reduction in the first year of local government terms. This pattern suggests a cautious approach by new administrations.
Despite these downturns, public consumption increased by 2.8% compared to last year’s period.
This growth mainly comes from increased spending outside of health emergency needs.
It shows a shift in government focus from immediate health concerns to broader economic issues.
Private Consumption
However, private consumption slightly decreased by 0.1%. This drop is linked to declining consumer confidence and the impact of rising prices on people’s buying power.
When consumers feel uncertain and face higher costs, they tend to spend less. This spending reduction can further slow down economic recovery.
These trends in Peru’s economy show a complex interplay between public and private sectors, consumer confidence, and broader economic conditions.
Each element influences the others, creating a challenging economic growth and recovery environment.