The sectors linked to exports, such as mining and agribusiness, are believed to be the ones with the best performance this year,
Moody's Investors Service Vice-President Jaime Reusche reported.
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We continue to expect that sectors related to exports, such as mining and agribusiness, will remain the areas with the best performance this year, while other sectors, such as retail trade will show a more moderate performance," he said in statements to the
Official Gazette El Peruano.
"We would expect the Construction sector to have a lower performance due to a slowdown in public investment, and this occurs every time new authorities take over regional and local governments, as they execute two thirds of public investment, which is linked to the performance of Construction. Although real estate projects may still be slightly in motion," the Moody's officer added.
Reusche stated that Moody's forecasts 2.3% GDP growth for Peru this year, and that the country saw an expansion of 2.6% by the end of 2022.
"The forecast is mainly due to the slowdown in the global economy, but also considers some downside risks, depending on how private investment and business confidence react to all the political turmoil at the end of last year," he remarked.
"This year, we expect private investment to remain non-existent, unchanged, which is something positive, considering the outlook for the end of 2022, that is, we predicted that private investment would contract this year, especially when we noticed the political turmoil of last December," he said.
The Moody's analyst emphasized that the protests had a more direct impact on the development of economic activity, because they prevent the movement and traffic of people, services, and goods.
"We believe that political noise reduces the economy's growth potential; it has a more indirect effect, because it hits the expectations of the private sector, and this reduces the dynamism of private investment, which is one of the most important engines of the Peruvian economy," he underlined.
Reusche underscored that subsidies can be granted to the vulnerable population as long as tax revenues continue to grow robustly, but this is a short-term measure that helps complement the boost in public investment, although it should not be used very frequently.
"The granting of subsidies should be coming to an end because we see a more complicated outlook for tax revenues this year," he stated.
(END) DOP/CNA/RMB/MVB
Published: 1/10/2023