The Peruvian Institute of Economics (IPE) has revised upwards its economic growth projection for 2024 from 1.9% to 2.4%.
After accumulating a decline of 0.6% in 2023, the Peruvian economy has shown signs of greater dynamism at the beginning of this year, according to the Peruvian Institute of Economics (IPE).
Indeed, economic activity experienced annual growth of 1.4% in January 2024.
The advance in production has been led by the recovery of sectors linked to domestic demand such as construction and commerce and services. These items were severely affected during the period of high social conflict recorded at the beginning of 2023.
These favorable results have also been reflected in indicators linked to investment spending.
According to IPE estimates, private investment would have accumulated an increase of 5% in the first two months of the year, closing a cycle of six quarters of consecutive falls that it has registered since the end of 2022.
Public investment
A similar reading is recorded in the case of public investment, which accumulates real annual growth of 70.6% as of February 2024, given higher levels of execution of works in subnational governments and the continuous progress of projects linked to the attention to the climate emergency by the National Government.
In this context, the absence of severe climate shocks in the first months of 2024 has resulted in a significant improvement in the expectations indicators of companies and households, notes the IPE.
For example, business expectations about the 12-month economy collected by the Central Reserve Bank (BCR) reached their highest level since March 2021 in February 2024, which would anticipate greater dynamism in economic activity in the remainder. of the year.
Faced with this new macroeconomic panorama, the IPE has revised upwards its economic growth projection for 2024 from 1.9% to 2.4%.
This increase is mainly explained, according to the IPE, by a greater than expected increase in private spending during the first quarter.
“In effect, private spending projections now point to an expansion of 2% in 2024, compared to the 1.3% previously forecast,” he noted.
Forecast for 2025
By 2025, the IPE maintains the forecast that the Peruvian economy will return to its potential growth rate of around 2.8%, in an environment of lower interest rates and a continued moderation of inflationary pressures.
This update was presented during the virtual seminar “Peruvian economy: new projections 2024-2025”, organized by the IPE, which featured comments from Jaime Reusche, vice president of the Moody's Sovereign Risk Group; and the moderation of Paola Villar, journalist specialized in economics.
What does Moody's say?
During his intervention, Reusche agreed with the projections of greater dynamism of the Peruvian economy in 2024, which would be favored by an improvement in private investment, mainly linked to the execution of new mining projects.
He also mentioned that the signals that have been shown by the Government related to the unblocking of projects in different sectors are important to consolidate a greater recovery of confidence in the private sector.
