Peruvian President Pedro Pablo Kuczynski’s measures to boost economic formalization and investments are set to speed up the country’s growth, the International Monetary Fund (IMF) said.
"In our view, [President Kuczynski’s] agenda to increase formalization and boost infrastructure spending —both nationwide but particularly locally— should clearly help pick up growth in the medium term,” IMF Western Hemisphere Department Director Alejandro Werner told Andina news agency.
In this sense, Werner praised reforms and measures to facilitate formalization in Peru, a country known to have high informality rates.
“We can already see key formalization-boosting measures being implemented, along with other actions to speed up infrastructure expenditure,” he affirmed.
Likewise, the economist referred to IMF’s upwards revision of its 2017 Peru economic forecast, up from 4.1% to 4.3%. The said change is mainly driven by the upwards revision of the national metal output, particularly copper.
“We have been lagging in our growth forecasts concerning Peru’s significant increase in copper production,” the IMF Director said.
Global scene
The global scene has seen various changes since IMF’s last update (October 2016), mainly due to upcoming policy amendments in the U.S., higher growth and inflation, as well as a stronger Dollar.
“Changes envisaged in U.S. policies and increased growth have led to higher long-term interest rates worldwide, a stronger Dollar in real effective terms and a moderation of capital flows to Latin America,” Werner explained.
Better 2017–2018 outlooks for China and other advanced economies, resulting from expanding economic growth in the second half of 2016 and fiscal stimulus prospects, will also shape the global picture.
Recovery
On the other hand, the IMF representative noted there is a moderate rally in commodity prices, particularly metals and oil. Such recovery is underpinned by China’s strong real-estate and infrastructure investments, as well as U.S. fiscal easing expectations and the OPEC oil output cut deal.
“These global economic trends have different effects in Latin America, where some countries are still marked by internal factors,” he added.
All things considered, IMF projects Latin America’s economic growth at 1.2% (2017) and 2.1% (2018), following the 0.7% drop recorded in 2016.
“The estimated recovery is weaker than the one forecasted last October due to the persistent weakness in some major economies, even when others continue to post moderate growth,” Werner explained.
“In order to stimulate economic activity, countries in the region are adopting more expansionary monetary policies, using available space to calibrate fiscal adjustment and, most importantly, introducing much-needed reforms on the supply side,” he concluded.
(END) CNA/MDV/DHT/MVB