Measures proposed by the Peruvian Government will alleviate the effects of recent Odebrecht graft case and "Coastal El Niño" phenomenon disasters, leading to 3.55% growth this year, Standard & Poor's projected.
"In our last forecast revision —in August 2016— we estimated growth at 4% in 2017. However, in our quarterly publication, to be released shortly, we revise Peru's growth projection to 3.5% this year," Standard & Poor's Associate Sovereign and IPF Livia Honsel affirmed.
Such downward revision owes to the impact of the said temporary shocks, i.e. El-Niño-related natural disasters and the massive Odebrecht scandal.
Nevertheless, the financial services company expects Peru's GDP to bounce back in the medium term, growing around 3.8% in 2018-2020.
Reconstruction with Changes
On the other hand, the S&P officer affirmed government measures will likely help counterbalance recent shocks.
"I think the stimuli being approved by the government may indeed offset the delay in other Odebrecht works," she said.
In this respect, Honsel described public spending demanded by post-disaster reconstruction as "positive," stressing short- and medium-term measures the process will entail.
In addition, she noted foreign investors will see the reconstruction process as an opportunity.
"Peru is one of the most stable countries in the region; it has shown prudence in fiscal matters, controlled deficits and low debt," she expressed.
"Likewise, its inflation rate is within the Central Reserve Bank's target range [1%-3%]."
Among LatAm's top
Lastly, the S&P analyst highlighted the Inca nation continues to expand —while not as much as it used to— and still posts one of Latin America's highest growth rates.
"That is something investors appreciate. Thus, Peru will remain attractive for foreign investment in infrastructure, as well as other sectors," Honsel projected.
"Unlike Brazil, Mexico and other major Latin American economies, Peru has been growing and will continue to do so," she added.
In this sense, Honsel underlined the Andean country's exports "are rebounding," and its economy has long benefited from a mining boom.
Similarly, she stressed national authorities' internationally-recognized fiscal and monetary policy management, as well as Peru's BBB+ investment grade.
(END) DOP/CNA/DHT/MVB
Published: 4/26/2017