Investment bank Credit Suisse estimates that the observed increase in copper price will lead to better fiscal outcomes or add further stimuli to the Peruvian economy.
"Higher copper price-related fiscal resources could be used to produce better fiscal outcomes or provide further stimuli to the
economy," the investment bank said in its latest report.
In this context, it projected a central government deficit of 2.9% of GDP for 2018 and of 2.3% for 2019 —lower than the Government estimates.
Improvement in the economy
The bank states that political uncertainty might have an impact on the economy and that strong growth is expected for 2018 in spite of this, thanks to the joint impact of fiscal stimulus and private investment.
"The increase in
copper price should be a source of upward surprises, mainly in fiscal and external sectors," it reiterated.
It must be noted
Credit Suisse revised its 2018 growth forecast for Peru down to 3.9% from a previous 4.2%.
Plus, private sector investment is likely to grow (again) this year (from 0.1% in 2017), considering there is a large number of medium-sized projects set to be implemented under the public-private partnership approach and due to new investments in the
mining sector in 2018.
Public sector investment, on the other hand, should remain encouraged by Pan-American Games-related construction activities and the fiscal momentum injected into efforts during the
reconstruction process following last year's floods.
(END) MMG/JJN/RMB/MVB
Published: 4/16/2018