In the first few months of the year, the limited impact from the third wave of COVID-19 infections has enabled the sectors that had been lagging behind to experience a rebound. As a matter of fact, we estimate that an important part of the growth of the first few months of the year will be explained by this “rebound” in the sales in retail and some services.
On the political front, the Executive’s capacity to implement its most radical economic and political agenda has continued to weaken this month. This is a result of three factors: 1) the continuing loss of political capital from the population, 2) the weakening in the face of the controlling bodies, such as the public prosecutor and Congress and, 3) the clearly reduced capacity to implement public policy.
Nevertheless, the sustained deterioration of public management and high regulatory risk at the sector-level continue to limit investment growth, both in the private and public sector. Likewise, low investment levels limit the recovery of quality employment, which, when added to high levels of inflation, continues to curb families’ purchasing power.
In summary, the events of the first few months of the year have been in line with our prospects in terms of the health crisis and politics, which leads us to maintain our forecast of a low economic growth of 3% for 2022. However, there are still some risks that continue to generate uncertainty about the economic outlook, such as a potential presidential impeachment or an escalation of the Russia-Ukraine conflict.
The Government’s main allies, Fuerza Popular and APP, leveraged the crisis triggered by the murder of 13 mine workers in Pataz to strengthen their influence over ministerial appointments.
So far this year, the economic recovery appears to have consolidated, with growth becoming more broad-based. Domestic demand has shown solid performance.
In the first quarter of the year, economic growth remained solid (3.6%). This was the result of a combination of favorable dynamics for GDP.
