The Peruvian Institute of Economics (IPE) projects economic growth of 1.9% by 2024, driven by an improvement in private spending, in a context of lower inflation and favorable financing conditions for consumption and investment. However, low business confidence and (FEN) remain the greatest risks.

Furthermore, the IPE highlighted that if expectations remain in pessimistic territory until the end of 2024, private investment would no longer grow 0.3% as estimated in our base scenario, but would show a fall of 1.5%. However, he considered that If a weak FEN is recorded, sectors such as agriculture and fishing, and the income of workers who depend on these activities, would recover significantlywhich could lead to greater than expected economic growth in 2024.

The Peruvian economy registered annual growth of 0.3% in November 2023, the greatest advance since April of last year, after accumulating six months in negative territory. The Peruvian Institute of Economics explained that this result was explained by the greater dynamism of primary sectors such as metal mining, which made it possible to counteract the decline in activities linked to investment, such as non-primary manufacturing and construction. With this surprising improvement, the fall in GDP that was anticipated for the last quarter of 2023 (-0.6%) would be less than expected.

The IPE explained that Primary GDP growth accelerated to a rate of 8.9% in November, which would have reached its greatest advance of 2023 to date. This rebound was driven by the advance of mining activity, which registered an increase of 10.6% due to the increase in copper volumes in various deposits such as Quellaveco (38.6%), Antamina (23.6%) and Las Bambas (20.2%).

He emphasized that the contribution of mining was complemented by the contribution of other areas., such as primary manufacturing (18.5%), favored by the authorization of the second fishing season in the north-central area, and also by the improvement of agricultural activity. In fact, agriculture showed its first positive figure in November (2.4%) after accumulating three months of double-digit declines, due to the recovery of crops oriented to the external market.

For its part, The GDP of non-primary sectors linked to domestic demand would have shown a fall of 1.4% in November, with which it accumulated 12 negative months. This is the longest period of consecutive declines in non-primary GDP in the last two decades, even above what was recorded during the pandemic.

In particular, The negative performance of non-primary GDP was concentrated in the items related to investment, which recorded a contraction of 7.3%, affected by the continued weakness of non-primary manufacturing (-6.7%) and construction (-8.1%). For their part, sectors linked to consumption – commerce and services – continued to show low dynamism, recording an increase of just 0.4%.

The indicators available for December 2023 show that the rebound in the primary sectors would have lost dynamism at the end of the year, mainly due to lower anchovy catch volumes than those recorded during the same month of 2022. This would have had a negative impact on fishing. and primary manufacturing. In this context, Business expectations collected by the Central Reserve Bank of Peru (BCR) were still at levels that anticipate continued weakness in sectors linked to domestic demand.. With this, from the Peruvian Institute of Economics (IPE) we maintain the projection on the economy of -0.6% in 2023.



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