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Note from Chief Economist


The week’s balance, by Hugo Santa Maria

Dear clients:

I hope you and your families are doing well. As we stated in the SAE webinars held on Thursday and Friday last week, Peru is one of the countries that has most rapidly implemented mandatory quarantine measures to reduce the spread of COVID-19. However, as we indicated in the daily report of March 25, bringing the economy to a sudden stop will lead to a steep fall in GDP of at least 20% in March, followed by three quarters of consecutive drops, and by an overall GDP contraction of 5% in 2020. These results assume that the spread of the virus will be effectively contained, and that fiscal and monetary responses will be quick and strong enough to compensate for the hard blow that the economy is enduring.

Over the past few days, the Ministry of Economy and Finance, the central bank, and the banking and insurance regulator have announced and implemented important measures that we analyzed and shared with you during the webinar. On the economic front, measures are focused mainly on transferring resources to vulnerable households and to micro and small businesses, as well as on the establishment of mechanisms to inject liquidity and provide loan guarantees to support financial institutions, families, and companies with the liquidity required to withstand the strong recession ahead. In this situation, it is important to reduce the risk of a rupture in the chain of payments, in order to prevent this recession from being worse than expected and to avoid a slow and painful recovery.

In APOYO Consultoria’s opinion, generally speaking – and with some exceptions, of course – the policy components that make up the “measures package” known as of now are well designed, point in the right direction, and their magnitude is significant. However, the shock we are facing is tremendous and requires an even larger response. We trust that after the first assessments and adjustments, the measures will be strengthened and complemented by others.

The evaluation of what has been done up to now should not disregard that the risk corresponding to the chain of payments is very serious, and that reducing this risk requires that every part of the chain is addressed. It is thus crucial to include measures to support medium-sized and large companies, which, besides being an important part of the chain of payments, are the main source of formal employment. If this is neglected, we risk damaging formal employment, a very important driver for recovery. 

Please recall that you will continue to receive our reports, Monday through Friday at 6:30 a.m. by email. If you prefer any other communication channel, please let us know. I would also like to remind you to please feel free to share our reports with your clients and/or suppliers during these extraordinary times, if you consider that this analysis may be useful to them.  Please stay safe and I hope to see you again soon.

Hugo Santa María

Partner and Chief Economist

SAE – Business Advisory Service


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.

Panorama fiscal

La crisis ocasionada por el COVID-19 generará un severo deterioro de las cuentas fiscales en el Perú. Si no se implementan medidas, el incremento de la deuda pública sería insostenible. Si se implementan algunas medidas tributarias, se podría estabilizar la deuda pública alrededor de 40% del PBI. Aún hay espacio para generar mejoras adicionales y estabilizar la deuda pública en el límite legal de 30% del PBI.

Economic outlook

Economic recovery continued to lose impulse in September. However, in September there were some positive signs on the economic and public health fronts. The above is positive news, but it is still too soon to expect an acceleration of economic recovery towards the end of the year.

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