At the conference “International events and their impact on the economies of the region and Peru” organized by CreditCorp Capital, the expert pointed out that the International Monetary Fund (IMF) expects economic growth in China this year and 4 to 5%. 2% by 2024.
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Along these lines, Peruvian Institute of Economics (IPE) senior analyst Teodoro Crisolucian said China is facing a financial blow to its real estate sector, which represents nearly 30% of its gross domestic product (GDP) and which has seen bankruptcy. From different real estate developers.
“Therefore, without an adequate policy response from the authorities, this item weighing heavily on the Chinese economy could cause a very significant slowdown in our major trading partner, which could spill over to other emerging economies.”He pointed out.
Camacho says this situation, with the Chinese economy experiencing low growth rates, could lead other dependent economies, such as Peru, to face lower demand for products. This means lower export volumes from Peru, but it puts downward pressure on international prices, in this case, the main minerals our country exports.
Climate phenomena and materials
An El Niño event is a risk monitored by countries in the region, including Peru, at least until the first half of 2024, which is considered Camacho.
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Within our country, unlike in Colombia or Chile, the effect that the Coastal Child may have should also be reviewed, the expert added.
Precisely, Chrysolucian added that one of the external risks facing the country is high volatility in commodity markets caused by unpredictable shocks such as geopolitical events or climate events or anomalies.
“Higher food, grain or fuel prices could create external inflationary pressures for Latin American countries, especially those of us that depend more on imports of certain foods such as wheat, corn and soy. “This kind of volatility could create some effects on the Peruvian economy,” he noted.
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Camacho also said geopolitical tensions could lead to more pressure on oil prices. Hence, it may have an impact on fuel prices.
Another risk to consider is the high global interest rates used by various central banks, said the IPE Crisologist. This could create more restrictive financial conditions in Latin America, including Peru, and raise the exchange rate, as well as create new inflationary pressures.
In this regard, CreditCorp Capital’s Camacho said that the investor market expects the US monetary policy rate to remain unchanged for the rest of the year and that the US Federal Reserve’s (FED) news has indicated more quantitative easing. The interest rate “doesn’t mean it will continue for some time, with the possibility of new hikes [de tasas]”.
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“At the cut-off point on October 23, the market will consider raising the policy rate for next year and sees room for the start of a cycle of modest cuts in the second half of 2024.”he added.
Election in America
The United States presidential elections will be held in a year, in November 2024, so Camacho felt that one of the important issues of the election campaign would be the country’s financial problems.
Therefore, he said, this aspect would be relevant in the global economy, because if the US eventually decides to make a fiscal transition, the initial reaction will be to strengthen the dollar.