International economic agents maintain positive outlooks regarding Peru's gross domestic product (GDP) evolution, Moody's Investors Service affirmed.
Moody's Sovereign Risk Group Vice-President Jaime Reusche explained this view in terms of Peru’s macroeconomy, which —far from having significant mismatches— presents a favorable medium-term potential growth rate for productive activity.
Foreign investors thus continue to see Peru as one of Latin America's most attractive economies to do business, the executive noted.
And while the country is currently going through a rough patch —due to Coastal El Niño phenomenon disasters and Odebrecht-related corruption scandal— "it is doing pretty well compared to other nations in the region."
Outlook
The Central Reserve Bank's (BCR) latest inflation report projected Peru’s GDP growth at 2.8% in 2017 —following a 3.9% increase in 2016— before bouncing back to 4.2% in 2018.
Moody's, on the other hand, forecasts a more moderate 2.6% GDP rise this year —due to delays in public investment projects— but shares the optimism about a rebound in 2018 and 2019.
"We expect a 3.9% rebound for 2018, driven by [post-Coastal El Niño disasters] reconstruction and the recovery of private investment, which will accompany this process," the analyst projected.
"Growth should range from 4% to 4.5% in 2019, slightly above the potential [growth rate]," he added.
Post-Niño Reconstruction
In this sense, the Moody's Vice-President said Peru's reconstruction plan to rebuild infrastructure damaged by Coastal El Niño floods and landslides "will most likely become the economic cycle's turning point."
As is known, the said process will require an estimated US$6.5 billion investment over the next three years.
"The population needs to understand that the reconstruction will take its time. Demanding too much speed would cause vulnerabilities in the process, leading to bridges that collapse shortly after being built and low-quality roads," Reusche warned.
Lastly, the Moody's representative highlighted the new Finance Minister —and also Prime Minister— Fernando Zavala is “well-known on a local level for being a good technical professional, as well as someone who fully understands the political demands of the positions he assumes.”
(END) DOP/CNA/DHT/MVB