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Economic outlook

26/10/2020

Economic recovery will remain slow towards the end of the year

At the global level, economic recovery lost momentum in September and October. The exception was China, where economic recovery remained strong. In the remainder of the year, it is most likely that the global economy will continue to recover gradually. However, there are two risks that could lead to a deterioration in the economic situation of the U.S. and Europe. First, there could be more widespread restrictions on economic activity in these regions, as the contagion curve continues to climb. Second, household consumption could contract if the approval of the new fiscal stimulus package in the United States is further delayed.

In addition, the standstill in the economic recovery process, the growing risks to productive activity in advanced economies, and the uncertainty about the outcome of U.S. elections, have altogether caused an increase in global risk aversion and demand for safe-haven assets.

The recent changes in the global environment have had both positive and negative implications for the Peruvian economy. On the one hand, increased demand for safe-haven assets, such as the U.S. dollar, has caused the local exchange rate (Soles per U.S. Dollar) to reach its highest level in 20 years. On the other hand, high uncertainty levels have kept the price of gold at historically high levels, and the solid recovery of the Chinese economy has fostered the continuous improvement of the price of copper, which reached a 2-year high. In October, export prices were thus almost 20% above their level last year.

In Peru, the pace of economic recovery has slowed down in recent months for two reasons: there is a lower impulse for the reopening of local productive activities, and domestic demand remains weak. In spite of this, sales in some markets, such as new housing, lightweight vehicles, and cement, have continued to recover rapidly in recent months, even exceeding their pre COVID19 levels.

Towards the end of the year, it is most likely that the speed of recovery will remain low, as several factors will continue to limit the recovery of domestic and external demand. COVID-19 will continue to restrict the normal functioning of the economy and the mobilization of people, public spending will continue to make a limited contribution to economic recovery, the impulse of liquidity programs will continue to decrease gradually, and regulatory risk and electoral uncertainty will further limit the recovery of business investment.

To access the complete report, contact us at contactaSAE@apoyoconsultoria.com.

OUR PERSPECTIVE

Regiones

La crisis sanitaria debido al COVID-19 en el interior del país tuvo un impacto progresivo y muy duro dado que superó rápidamente la escasa infraestructura hospitalaria y una capacidad de atención médica bastante limitada. Actualmente, los indicadores muestran un declive notorio en las tasas de contagio y fallecidos, al igual que en Lima; sin embargo, las regiones enfrentan el difícil reto de recuperar su actividad económica local y de preparase para posibles rebrotes del contagio.

Indicca

En octubre, el Indicca (Índice de Confianza del Consumidor de Lima Metropolitana de APOYO Consultoría e Ipsos) se ubicó en 42 puntos, ligeramente por encima de los registros históricamente bajos de hace unos meses. Con este resultado, la confianza de los hogares empieza a mostrar una mejora muy gradual, pero continúa sumamente deteriorada con respecto al período precrisis.

Sondeo SAE

De acuerdo con el sondeo empresarial realizado durante la semana del 12 al 16 de octubre a los clientes del SAE, siete de cada diez ejecutivos califica al riesgo regulatorio desde el Congreso con el máximo grado de preocupación para la toma de decisiones de inversión en sus organizaciones empresariales en los próximos 12 meses.

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