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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.

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OUR PERSPECTIVE

INDICCA

En diciembre el Indicca se ubicó en 43 puntos, cuatro puntos por encima del nivel del mes anterior. Si bien este resultado sugiere una mejora en las condiciones para consumir de las familias limeñas hacia el cierre del año, en realidad una buena parte del incremento se explica por el efecto estacional que siempre se da en fiestas navideñas.

Agroindustria

La primera protesta social que tuvo que enfrentar el gobierno del presidente Sagasti ha sido protagonizada por trabajadores vinculados con la agroindustria de exportación, inicialmente centrada en la región Ica, que aporta la quinta parte de las exportaciones del sector agrícola no tradicional. Las demandas sociales se centraban en tres temas principales: (i) la eliminación de las services, (ii) el aumento de la remuneración diaria (de S/39,2 a S/70) con acceso a mayores beneficios y (iii) estabilidad laboral.

INDICCA

En noviembre el Indicca (Índice de Confianza del Consumidor de Lima Metropolitana de APOYO Consultoría e Ipsos) se ubicó en 39 puntos, tres puntos por debajo del resultado del mes anterior. Este resultado representa un estancamiento en la confianza de los consumidores en niveles históricamente bajos y pone freno a la incipiente recuperación que empezaba a observarse.

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