Recession: How will the economy close in 2023?

The Peruvian economy closes this 2023 in the middle Depression, after more than two quarters of falling production. Although he Ministry of Economy and Finance ( MEF ) is optimistic, expecting growth of 1.1%, while other companies will end the year in the red.

For example, the consulting firm Macroconsult, The economy At the national level, it will decrease by 0.5% in 2023.

Eduardo Jiménez, economist and head of the Macroconsult information system, explains that they downgraded the plan after noticing that “the latest figures for July, August, September are very bad.”

“It’s kind of a combination of broad factors. Those are the themes objections; Climate issues, ie, the baby (event) we experienced this year; This process of adjusting family investment. There has been a very strong fall in expectations. Business expectations are in negative or pessimistic territory,” explains Jiménez.

In this scenario, the latest data from the National Institute of Statistics and Information (INEI). Departments Fishing, construction and agriculture have been hit hard in the past year.

For example, just in case AgricultureThe Peruvian Institute of Economics (IPE) warns that we will see the lowest result in more than 30 years.

“The agricultural sector will record its worst decline since 1992, mainly affected by adverse weather effects, but it is also affected by social conflicts and fertilizer crises in 2022 and 2023,” explained Víctor Fuentes, economist and public policy manager of IPE.

Although other economic activities are linked consumptionTrade and services remain positive and are declining.

“They are very tight sectors. An important part is connected to the long process of inflation, which is already declining, but to the extent that we do not participate in investments that stimulate growth and allow production. jobs And the better the salary, the higher the income will be difficult to achieve. This means that it is a very low-growing consumption sector,” says Fuentes.

Sources indicate that only mining has been blocked National economy will have a bad effect.

“Mining supports, mainly due to two factors avoiding the worst drop in GDP in 2023: on the one hand, due to the resumption of activities of Quellaveco production and different mines that were paralyzed in 2022. This year the drop will be steeper, at least one point more negative,” he said.

Will it return in 2024?

Although the Ministry of Economy has promised to recover from the first quarter of 2024, when will we recover from the crisis? Depression?

Luis Miguel Castilla, former Minister of Economy and economist at Videnza Consultores, explains how we can recover from this situation.

“I believe that the cycle will end in the second half of the year, but the problem is that we cannot recover income levels. I believe that the biggest risk facing the Peruvian economy is economic stagnation, which means that we are stuck at 1.5% and 2.5% growth, which is not enough to create the living conditions that Peruvians need, ” he points out.

Economist says the ideal is to achieve at least 4% growth. Private investment.

“I believe it is important to recover private investment (because 80% of investment is private, 20% public) and this is achieved by creating conditions of legal protection, administrative simplification and sectoral measures. Are beginning to bear fruit,” he said.

Castilla added that an environment of stability is essential to recovery Investment.

“The tremendous short-termism has set the tone for postponing long-term plans because of the lack of clarity about what to expect, and on the other hand, it’s important to see consumption recover as it happens. Apart from the pandemic, the first years should be one where we’re going to see zero growth or a little contraction in private consumption, and private consumption Let’s remember that 60% of the total expenditure in the economy,” commented Castilla.

For other experts, the economic measures proposed by the government are not wrong in theory, but they are insufficient.

“The problem is that these programs seem to be inadequate, perhaps because the poorest people are prioritized, which would have an important benefit. consumption. Perhaps the bonus would have been more important for this group,” commented Jimenez.

For now, not counting the pandemic, IPE and Macroconsult agree that we face the worst economic downturn in 25 years, and they warn that the recovery in 2024 will not be strong enough.

These decisions hinder the creation of more and better jobs Income Prevents population and, therefore, poverty reduction, affecting Peruvians’ quality of life.