Monday, October 22, 2018

Moody's: Peru economic growth in 2018 is greater than in 2016, 2017

Moody's Investors Service Vice-President Jaime Reusche on Monday affirmed Peru registers a better-quality economic growth this year, compared to 2016 and 2017.

"It (better economic growth) can be noticed in the collection. Tax revenue rebound has been significant, between 20% and 22%," he told Andina news agency.

According to him, while the base effect was recorded in the first half of 2018 —due to Coastal El Niño phenomenon— it had started to moderate in the second half. 

Yet, he said political noise begins to affect enthusiasm again. 

The Moody's representative indicated the business sector wanted to take part in this enthusiasm as the good figures —registered in 2018's first half— were certainly influenced by the base effect.

"Generally, it sparks a confidence improvement, and people start to feel more comfortable with the economy. This generates the boost aimed at switching the investment engine from public investment to private investment," he indicated.

Government transition 

On the other hand, the officer stated the Inca country's economy was starting to pick up after the political noise —registered at end-2017 and earlier this year— was caused by the government transition. 

As is known, former President Pedro Pablo Kuczynski resigned his post last March amid a political scandal. He was replaced by then Vice-President Martin Vizcarra.

According to Reusche, economic growth —in the first part of 2018— was underpinned by domestic demand and public investment. 

Nevertheless, the latter has begun to slow down due to local and regional governments' transition. 

"Once again, political uncertainty has started to affect business confidence and medium-term forecasts," Reusche added. 

Furthermore, the economy is currently in a transition phase trying to determine if it will grow at a 3% or 4% rate, he concluded.