Peru’s Ministry of Economy and Finance (MEF) on Friday published the Multiannual Macroeconomic Framework 2017-2019, which sets the economic policy and macroeconomic projections for the next three years and ensures a sustained economic growth and responsible fiscal policy.
In 2016 the economy will consolidate its recovery process started in 2015 and will expand by 3.8%, within a range of 3.5% and 4% in a macroeconomic environment characterized by:
(i) An unfavorable international context with lower export prices and slow growth of trade partners
(ii) The entry of new mining projects
(iii) A slightly expansive fiscal policy led by public investment
(iv) A gradual increase of BCR’s reference interest rate as a response to downward pressures that bring inflation and inflationary expectations up
The context of economic acceleration will continue over the following years.
In 2017 the economy will expand 4.6%, allowing the national production reach its potential level. Over the next years the economy will return to its medium-term potential growth rate of 4%.
A characteristic factor of these years will be the fact that growth of private internal demand will be twice the growth of 2016, with an important recovery of private investment, as a result of the start-up of important infrastructure projects and economic agents’ improved expectations in the post-electoral period.
This last factor poses upside risks for the Multiannual Macroeconomic Framework growth projection.
It is worth noting the Peruvian economy will not only post one of the highest growth rates in the region this year, but will be the fastest-growing compared to 2015, according to IMF.
Likewise, it will maintain a leadership position over the following years.
Three factors explain the outstanding performance of Peru compared to its regional peers.
First, its high level of competitiveness in the mining sector will increase its supply, mainly of copper, within a context of low prices.
Second, the cumulative fiscal space in the past few years will lead to a moderately expansive fiscal policy in 2016.
Lastly, this performance is also driven by the spike in business and consumer confidence indicators.
(END) JJN/JJN/RMB/MVB
Published: 4/29/2016