PUBLIC INVESTMENT WILL CONTRIBUTE TO THE ADVANCEMENT OF THE ECONOMY THIS YEAR

January 20, 2022 - Lima.- Analysts highlight strength in macroeconomic management of the country in 2021 and importance of holding events to promote Peru in the world and attract private capital.

The country's productive activity is expanding and last year the gross domestic product (GDP) would have grown 13%, and in 2022 it is expected to continue its progress.

Peru is projected to show an advance of 3.2% in 2022, above the Latin American average (2.5%), although below the world average (4.3%), analysts from the FocusEconomics Consensus Forecast LatinFocus specify in its December 2021 report, reports the Official Gazette El Peruano.

The country would also register higher growth than Japan (2.6%) this year, the panelists project.

In Latin America, Peru would show an increase of 3.2% this year, placing the fourth position in Latin America along with Uruguay (3.2%), after Colombia, Paraguay and Bolivia, whose advances would be 4.1%, 3.6% and 3.3%, respectively, according to the panelists. 

It will be followed by the productive activities of Mexico (2.9%), Ecuador (2.9%), Chile (2.7%), Argentina (2.3%), Brazil (1.2%).

In turn, economist Javier Zúñiga projects that the country's economic activity would increase between 2.5% and 3% this year, driven by public investment, and it is possible that the 2021 figure could be exceeded.

According to figures from the Ministry of Economy and Finance (MEF), public investment reached an execution of S/.39,102 million 622,434 during 2021, registering a nominal growth of 38.02% compared to the expenditure registered in 2020 (S/.28,330 million 668,470).

It is also expected that the levels of execution of public investment will improve, says the economist.

Public investment is associated with infrastructure works such as roads, bridges, among others. It is a good opportunity to prepare the schools before the start of face-to-face classes in terms of health and and that the facilities have water, he says.

It would also be convenient to hold events to show Peru to the world, in order to capture some additional resources so that foreign direct investment will be greater, and with it the country would grow by 4% this year, he says.

Macroeconomic management
In this regard, the vice president of Latin Pacific Capital, Emilio Zúñiga, comments that last year Peru showed a relevant strength in macroeconomic management, which allowed it to perform well, even better than expected.

The fiscal deficit was much smaller than expected, about the half part. What needs to be looked at now is what will happen this year, he says.

That low percentage caused inflation expectations to fall, it is no longer an issue that can generate nervousness for the moment.

At the end of December 2021, the Ministry of Economy and Finance (MEF) indicated that Peru ended the year with a reduction in the fiscal deficit, which would have been 3% of GDP. He also said that GDP would grow 13% in that period. 

Private investment
The vice president of Latin Pacific Capital mentions that this year the government's challenge is to regain confidence to boost private investment, since an electoral process (municipal and regional) will be carried out. 

Zúñiga believes that "a shock of confidence is needed."

He believes that the scheme of press conferences led by the Presidency of the Council of Ministers (PCM) with the holders of the different portfolios is  helpful, when addressing important issues, since they know their sectors better, he says.

The MEF projected, last December, that private investment in Peru would have advanced 34% in 2021 compared to 2020 and 12% in relation to 2019.

Zúñiga maintains that the Government has to take advantage of the 2022 public budget, approved by the Congress of the Republic, as well as the delegated legislative powers to move forward this year.

"Peruvians are interested in this year being better than 2021," he adds.

On the other hand, the Central Reserve Bank (BCR) recently reported that business expectations about the economy at three months and 12 months registered improvements in December 2021.

He explained that eight indicators out of a total of 18 (which measure both expectations and the current situation) were located in the optimistic section.

Businessmen's expectations of the three-month economy increased from 40 points in November to 41 points in December.

Source: El Peruano