Fiscal Balance in Peru
Peru - Fiscal Balance
Government unveils region’s largest stimulus package to combat coronavirus crisis
The government announced a massive stimulus package worth up to 12% of GDP at the end of March, in a bid to mitigate the economic fallout from Covid-19. The Peruvian economy is expected to be hard hit by the pandemic as a stay-at-home mandatory isolation period and curfews squash domestic spending, while low metals prices and shriveled demand dent the important export sector. However, aggressive measures by both fiscal and monetary authorities should help the economy weather the storm relatively well compared to other emerging market peers. Relative to its peers, the country also has ample fiscal space, low debt levels and solid buffers.
The stimulus package is divided into three phrases of SOL 30 billion (around USD 9 billion) aimed at combating the current economic fallout, supporting struggling businesses and fueling the recovery after the health crisis ends. Highlights include approximately 4% of GDP to be spent on cash transfers to vulnerable citizens, early pension fund withdrawals and employee subsidies to corporations to prop up households’ cash flows.
Commenting on Peru’s outlook, Daniel Velandia, director of research at Credicorp Capital noted:
“The Peruvian economy has one of the strongest macroeconomic fundamentals in emerging markets: high international reserves (29% of GDP), low CAD (-1.5% of GDP), low public debt (27% of GDP), and high fiscal savings (12% of GDP). Nonetheless, it is clear that Peru will not be able to escape the effects of a severe deterioration of the international environment and the COVID-19 outbreak. We believe that the recovery in 2H20 will be gradual and the key factors to carefully monitor are: i) a lockdown extension and the subsequent restrictions, ii) the financial health of households and firms, iii) the effectiveness of the adopted policy measures, and iv) the need to avoid populist measures that undermine macroeconomic stability that has been built in the past 30 years.”
FocusEconomics panelists are still factoring the latest developments into their projections. An updated Consensus Forecast will be released on 21 April.
Peru - Fiscal Balance Data
|Fiscal Balance (% of GDP)||-1.9||-2.3||-3.0||-2.3||-1.6|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||0.0||-0.60 %||Nov 08|
|Exchange Rate||3.31||-0.06 %||Jan 01|
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January 14, 2021
At its first meeting of the year on 14 January, the Central Bank of Peru maintained its key policy interest rate at the record low of 0.25% for the ninth meeting in a row.
January 14, 2021
Economic activity dropped 2.8% year-on-year in November (October: -3.8% yoy).
January 7, 2021
Business confidence dropped to 49.5 in December, down from November’s 52.8 and ending a run of seven consecutive months of improving sentiment.
January 7, 2021
Merchandise exports edged up 2.4% in annual terms in November (October: +9.9% year-on-year) marking the third consecutive month of growth.
January 4, 2021
Consumer prices in Metropolitan Lima increased 0.05% in December over the previous month, softening from November's 0.52% rise.