Interview with Diario Gestión
The partner and chief economist of APOYO Consultoría, in an exclusive interview with Gestión, reflects on the country’s current situation.
“I prefer that there be no counter-reforms, that there be no more damage. I do not see the organization or political focus of our authorities at this moment.”
In a conversation with Gestión, Hugo Santa María, partner and chief economist of APOYO Consultoría, reviews the current state of the Peruvian economy and the risks ahead. In addition to expectations for the election year, he insists that insecurity is putting families and businesses “in check.”
In 2024, we should have closed with growth above 3%, and in 2025, we believe it will be slightly below 3%. However, the growth in 2025 is “somewhat better” because it is a “cleaner” projection, without measures like the withdrawal of AFP pension funds, which contributed to some growth. It is also “cleaner” from post-El Niño rebound effects.
(The result will be) more “driven” by private spending, and employment growth will be generated in almost all economic sectors.
Still, in terms of growth rates, Peru has lost its regional appeal. We remain very attractive in terms of economic stability, but we are leaving greater potential growth on the table.
I believe that political and institutional deterioration, the degradation of public services—everything—is affecting the economy’s ability to grow and create jobs.
A political crisis. In Peru, anything is possible—six presidents in eight years. Today, we think the most likely scenario is that President Dina Boluarte will remain in office until July 2026. However, if that is not the case, regardless of how a political transition would unfold, the “wait-and-see” period of extreme pre-election caution would start earlier. But for now, we expect that not to happen.
“The main goal is for Peru to reach the next democratic transition in the best possible shape in terms of fiscal control and preventing harmful populist policies.”
If a trade war breaks out—because this seems like the beginning—everyone loses. Global growth will slow down, economies like China’s will slow down, and so will the U.S. A trade war is bad for everyone. Market volatility and nervousness will increase.
Even so, I must say that in this scenario, Peru has some opportunities to come out well. The country should remain “friends with everyone” and take advantage of its market access to fill gaps left by other economies in the U.S. market.
Looking back, the numbers do show a pre-election slowdown—it has always happened in Peru, in good times and bad. But on the other hand, we maintain constant contact with executives and decision-makers in over 300 companies operating in the country.
I also see an attitude of: “The country isn’t going to shut down, my company isn’t going to shut down, I have to keep moving forward.” So, to give a short answer—yes, there will be an effect. We will feel it, but if everything remains normal, it will only be noticeable towards the end of 2025 and hopefully won’t last long into 2026.
“There are reasons for concern because all the measures from Congress regarding wages, increases, and others have made public spending more rigid.”
Peru’s middle class, compared to what one might think, imagine, or aspire to, is vulnerable, and that won’t change in the short term. That said, we do see lower-middle and middle-income households improving slightly this year.
For example, this year, employment is growing in more sectors. One important sector is agribusiness. More sectors are expanding, inflation is under control, and this leads to more jobs and income generation.
Even so, at our current growth rate, we still have several years to return to the 22% pre-pandemic poverty level. We nearly hit 30% during the pandemic, and now we’re around 25%. We are moving slowly in the right direction, but we still have a long way to go.
It’s impossible not to talk about the country’s insecurity. Has it already spiraled out of control? The construction sector told Gestión that there are areas where projects can’t even be carried out.
It’s a huge problem, not only for individuals but also for businesses. We’re beginning to hear from our clients in industries like mass consumer distribution and construction materials distribution. They report that they can’t enter certain areas because vendors or workers refuse to expose themselves to danger. It’s a very serious issue.
It’s not that companies simply decide to invest and magically make it happen. Businesses do make decisions, and they avoid locations that are too dangerous for their employees.
No one wants their people to face security issues. You can deal with foreign exchange fluctuations, inflation, financial stability, and low demand—but not crime.
No es que la empresa decida invertir y eso es un acto de magia. Por supuesto que las empresas toman decisiones y se alejan de geografías complicadas para su gente. Nadie quiere tener personas con complicaciones por tema de seguridad. Se puede lidiar con otros negocios, el tipo de cambio, inflación, estabilidad financiera, con que la demanda crece poco, pero con la criminalidad no.
José Arista left the Ministry of Economy and Finance. What challenges will define José Salardi’s tenure?
The main goal is for Peru to reach the next democratic transition in the best possible shape in terms of fiscal control, targeted economic stimulus, and stopping harmful populist policies or policies driven by special interests.
The MEF must quickly regain its leadership in economic matters—controlling public spending levels and composition, “stopping the bleeding” of resources caused by Petroperú, and unblocking major projects like Chavimochic, Majes Siguas, and hundreds of stalled infrastructure projects.
Additionally, the MEF must strengthen the political weight of technical and responsible arguments to prevent harmful legal initiatives (from Congress and the Executive) that damage the economy and hinder the creation of quality jobs, keeping people away from crime.
Our specific projection is that we will close with a fiscal deficit of 2.5% of GDP this year. Nearly one percentage point of that comes from extraordinary tax revenues due to last year’s high metal prices and the sale of a distributor.
If we “clean” those effects out, the actual deficit level would be very similar to last year’s.
Short answer: Will we lose our investment-grade rating in the next two years? Most likely not.
That said, there are reasons for concern. Congress’s measures on wages, salary increases, and other issues have made public spending in Peru more rigid.
Then we have Petroperú. How much money will all Peruvians have to contribute? Each of us will have to pay for that. The government must allocate resources to sustain a poorly managed and unviable company.
How many times have we heard public officials say they will simplify administrative processes to facilitate investment? Hopefully, something can be done, but if it isn’t fulfilled, it wouldn’t be the first time. We are used to hearing these promises of simplification and reorganization.
What projects should this government at least leave on track for the next administration?
Several, but the national government could take the lead in getting some on track. Two major ones are Chavimochic and Majes Siguas.
For fairness, they do not depend solely on the national government. I would also consider key infrastructure in Lima and other irrigation projects. The idea is to untangle real obstacles.
Today, I prefer that there be no counter-reforms. That no more damage is done. I do not see the organization or political focus of our authorities at this moment. There is no capacity to invest even a little political capital.
Source: https://gestion.pe/economia/se-puede-lidiar-con-el-tipo-de-cambio-inflacion-pero-no-con-la-criminalidad-hugo-santa-maria-economia-peruana-donald-trump-noticia/
