Good news! Peruvian economy shows the fastest recovery in the region

Recovery is in our sights. Seven months have passed since the Government decreed mandatory social immobilization throughout Peru, in order to curb the mass outbreak of COVID-19 in the national territory.

This period of confinement was necessary to safeguard the most important thing the country has: its people. And, although it was initially feared that this set of restrictions would make the national economy plummet, as this chaotic year draws to a close, it seems it is recovering quite well.

On the right track

In an interview conducted by the Andina news agency, Peru’s leading economist, Hugo Perea, of BBVA Research, predicts a favorable outcome for the sector.

He emphasized that although the economy experienced a sharp decline during the early months - during the second quarter it hit a decline of 30.2%, a figure that, according to the Peruvian Central Reserve Bank (BCR), has been one of the most severe in 100 years - the statistics have begun to improve dramatically. To such an extent that, today, Peru is considered to be the country with the fastest rising economy across the entire region.

"We did indeed see a sharp drop in April, but from May onwards we can see a more pronounced rebound. That is the important thing to highlight," Perea told the media.

Swift action

The economist stressed that the swift action of the Ministry of Economy and Finance (MEF), led by María Antonieta Alva Luperdi, and the Peruvian Central Reserve Bank (BCR), have led to the recovery beginning to take shape.

"There were rapid and appropriate responses in terms of macroeconomic policies by the Central Bank and the Ministry of Economy and Finance, which have prevented the effects of the crises from really taking hold," he said.

Several factors have influenced this situation, among which the economic reactivation, which began its first phase in May of this year (the country is currently in the fourth and last phase), stands out. Another aspect to be taken into account is the implementation of assertive monetary and fiscal policies.

For his part, economist Jorge Gonzales Izquierdo agrees with the proposed outlook and considers it to have been achieved quite quickly.

"In the third quarter of this year we saw a rapid recovery after the sharp drop in the second quarter. The recovery was fast... That's how it happened all over the world. Countries that saw their economies fall at the beginning of the pandemic are now experiencing a rapid recovery. Peru is on par," he said.

He also noted that from the second quarter of 2020, both consumer and private investment managed to recover strongly.

We should not let out guard down

However, despite the situation being relatively encouraging, Perea still does not think that the recovery is enough to reach the percentage that Peru was showing before the pandemic.

"We are still in a fragile and precarious situation. We are still suffering from the economic impacts of this crisis that will leave its aftermath, but on the positive side we have been able to take action to mitigate the blow... Nobody in the world knew what to do at the beginning of the pandemic, both in terms of health and the economy, it was not written in any manual," he explained.

Gonzales Izquierdo foresees a similar situation and believes that despite the favorable recovery (which could, according to the economist, develop during the second half of the year), we cannot afford to lower our guard and we must continue working towards this recovery.

Today, more than ever, Peru needs to stay united. Together, we have been able to do everything, and this time should be no exception.

Let's not stop now.

Sources: Andina