BBVA Research published a report on Peru’s economy and lowered its growth forecasts, estimating that monetary poverty in the country will also increase next year.
Inflation is falling
According to BBVA research, inflation in Peru has declined rapidly, although it remains relatively high. in it a reportHe highlighted that although the effects of El Niño Costero will continue to resist the return of food prices to normal, especially in the summer of 2024, it is estimated that inflation will fall more quickly from now on, mainly due to lower inflation over Annual basis. Annual comparison base
In this sense, they pointed out that some of the factors that will intervene in this trend will be lower international input prices, weak economic activity, and a restrictive monetary stance. In this context, they said the following:
“Taking this into account, estimates indicate that inflation will close the year 2023 at 4.1%, and that it will be at 2.8% at the end of next year, given that the reduction will strengthen as the effects of the El Niño phenomenon dissipate.”
On the other hand, with regard to the fiscal deficit, they commented in their report that by 2024 it will remain at 2.7%, because, like income, it will decrease due to the expected decline in metal and fuel prices, and the same will happen with expenditures when the support that was provided is withdrawn. Introducing it in 2023. However, they noted that total public debt would be just under 35% of GDP at the end of 2024.
exchange rate
According to what was covered in the report on the situation in Peru, there has been downward pressure on the local currency during the last two months due to the rise in external rates and the possibility of them remaining high for a long period, in addition to the loss of the local currency. Dynamics of activity in China.
For its part, BBVA Research expects that the Peruvian sol will weaken somewhat due to the start of cuts in the reference interest rate, a measure that, as they explained, will lead to a decrease in the attractiveness of holding assets in the local currency.
In conclusion, they estimated in their report that the exchange rate between the sole and the dollar would close the year “between 3.70 and 3.80 soles per dollar.”
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