Se ha denunciado esta presentación.
Se está descargando tu SlideShare. ×

Peruvian economy would go into a deep recession if the government does not take radical measures

Anuncio
Anuncio
Anuncio
Anuncio
Anuncio
Anuncio
Anuncio
Anuncio
Anuncio
Anuncio
Anuncio
Anuncio

Eche un vistazo a continuación

1 de 3 Anuncio

Peruvian economy would go into a deep recession if the government does not take radical measures

Descargar para leer sin conexión

It is clear that the world economy and trade will decline this year, in a crisis worse than the global financial crisis of 2008 and 2009. Analysts and international organizations such as the OECD and the IMF already forecast so [1]. The Peruvian economy steadily grew since the second half of the 2000s, at a pace of three times the annual average of Latin American countries, partly driven by a favorable external sector: due to higher exports of goods, huge foreign direct investment, increasing tourism, and remittances from Peruvians abroad. For example, in 2019 almost 65 billion dollars entered the country from those sources, an amount equivalent to around 30% of Peruvian economy output that year. Around 47.7 billion dollars came from exports of goods, 8.9 billion dollars from foreign direct investment, 4.8 billion dollars from tourism, and 3.3 billion dollars from remittances of Peruvians abroad. Peru's GDP that year was $ 228 billion. This year only part of that amount of $ 65 million would enter Peru.

It is clear that the world economy and trade will decline this year, in a crisis worse than the global financial crisis of 2008 and 2009. Analysts and international organizations such as the OECD and the IMF already forecast so [1]. The Peruvian economy steadily grew since the second half of the 2000s, at a pace of three times the annual average of Latin American countries, partly driven by a favorable external sector: due to higher exports of goods, huge foreign direct investment, increasing tourism, and remittances from Peruvians abroad. For example, in 2019 almost 65 billion dollars entered the country from those sources, an amount equivalent to around 30% of Peruvian economy output that year. Around 47.7 billion dollars came from exports of goods, 8.9 billion dollars from foreign direct investment, 4.8 billion dollars from tourism, and 3.3 billion dollars from remittances of Peruvians abroad. Peru's GDP that year was $ 228 billion. This year only part of that amount of $ 65 million would enter Peru.

Anuncio
Anuncio

Más Contenido Relacionado

Presentaciones para usted (20)

Similares a Peruvian economy would go into a deep recession if the government does not take radical measures (20)

Anuncio

Más reciente (20)

Peruvian economy would go into a deep recession if the government does not take radical measures

  1. 1. Peruvianeconomy and the risk of a deeprecessionif government does not take more radical measures It isclear that the worldeconomyandtrade will declinethisyear,inacrisisworse thanthe global financial crisisof 2008 and 2009. Analystsandinternationalorganizationssuchasthe OECD and the IMF already forecastso [1].The Peruvianeconomy steadily grew since the secondhalf of the 2000s, at a pace of three timesthe annual average of LatinAmerican countries, partlydrivenby afavorable external sector:due tohigherexportsof goods, huge foreigndirectinvestment, increasingtourism,andremittancesfromPeruviansabroad. For example, in2019 almost65 billiondollarsenteredthe countryfromthose sources,anamount equivalenttoaround30% of Peruvianeconomy outputthatyear.Around 47.7 billiondollars came fromexports of goods,8.9 billiondollars fromforeign directinvestment,4.8billion dollars fromtourism,and3.3 billiondollarsfromremittancesof Peruviansabroad.Peru'sGDP that yearwas $ 228 billion.Thisyearonlypartof that amountof $ 65 millionwouldenterPeru. Then, thisyear2020, external factorscannotbe expectedtocontribute toPeru'seconomic growth,and as statedbefore onlyafractionof the 65 billiondollars receivedin2019 would enterPeruvianeconomy.Sothe country has to strengthen itsdomesticdemand,asstrongas possible.Butwithamonthof inactivityof muchof the national productive apparatusdue to quarantine (national lockdown) imposedfrommarch16 that will lastuntil April 12(and assumingthatthe situation normalizes afterthatperiod, aquite optimisticassumption), overall productionwill decrease andpeople´s income (andconsumption) will alsodecrease.If policiesare nottaken quicklymanycompanieswould gobankrupt,unemploymentwould increase andwithit social unrest. The governmentneedstoactdirectlysupportingthe income of the populationandpreventing companiesfromgoingbankrupt asmany of themdo notreceive anyincome orproduce and have paymentstodo. Facedwithsimilarproblems, whatare othercountriesdoing? In countriesas differentas USA,Canada,Spain,Japan[2],Malaysia or Bolivia, governmentsare implementingenormouseconomicstimuluspackagesforamountsequal toorgreaterthan 10% of the size of theirGDP (inpolicies known as“helicoptermoney”1 ).InPeru,notonlythe amountof the economicstimulus isinsufficient,addingupeverything sofarannounced would amountto only 2% of GDP; butthe mostimportantthingisthat itdoesnot put the moneyin the handsof all the people whoare losingincome. Notonlythe poorestfamiliesinPeruare losingincome,andtothissegmentthe governmentis givinganexceptional bonusof 760 soles (around220 dollars).Intotal itis estimatedthat3.5 million households wouldreceive thatamount(Perutotal populationisaround32 million).But not onlythose people are losingincome,everybody islosingit.Andcompaniestoo.Let'stake the example of abarber shop where 2 to 6 or more people workingthere will nothave an income forat leasta month.These people are notlikelytogetthatgovernmentbonus.And small companieslikethis barbershop will nothave money topaythe rentof the premises,nor the utilities.Whathasthe governmentdone tohelpthisbusiness?The onlythingithasdone is to give thembusiness abreakby exemptingthem topaytaxesinmarch and April andother minormeasureswithlittleimpact. 1 See for example: https://www.forbes.com/sites/vineerbhansali/2020/03/17/helicopter-money-is- here/#425bf46c781e
  2. 2. The government, besides givingabonustothe poorestfamilies,willallow anamountof upto 2,400 solestobe withdrawnfrom eachworker’sService Time Compensation(CTSbyits acronymin Spanish).Butthiswill onlyreachasmall part of the populationthat have CTS and worksin companiesinthe formal sector(accordingto some calculationslessthan50% of Peruvianshave employmentinthe formal sector),andthiswillcause those people savings to decrease, asCTS islike a savingfundthatwouldallow themtosupplementthe meager pensionthatmanywill receivewhentheyretire. Anothermeasureisthe one-month suspensionof worker’s contributionintothe private pensionfund(AFPbyits Spanish acronym),butalsothis will have a limitedeffectsince mostPeruviansdonotcontribute tothe AFPs,andwill alsoaffecttheirpensionfund. The lastmeasure thatthe governmentis proposingis toallowworkerswhohave beenunemployedinthe last6 monthsto withdraw up to 2,000 solesfromitsaccountin the AFPfund. Lastlythe governmentwill grantasubsidyamountingto35% of the salariesof employeeswho earnup to 1,500 solespermonth, measure aimedatpreservingemploymentandhelp companies. Butthatmeasure will be forcompanies inthe formal sectorof the economy,and subjecttoa seriesof conditions.Manycompaniesare unlikelytomeettheseconditions, especially inthe case of the vast majorityof small andmicro-businessesthatare informal. What are governmentslike the USor other countries mentioneddoing?Incountriesthathave unemploymentinsurance suchasthe US or Canada,for example,the governmentwill temporarilyincreasethe amounttheyreceivefromthisinsurance [3],[4],andinother countriesthere will be directtransferstoworkers (andfamilies) whoreceive asalarynotso high, or to retiredpersons,asinMalaysia[5],or theywill give moneytoall peopleof working age,as in Japan(whichdidsomethingsimilarin1999 and 2009) andwill doit again. Besides this,governmentswill giveloanstobusiness atlow interestrates. In summary,whatthe governmentmustdoisgive to everypersonof workingage anamount of letsay700 soles,sothattheycan spendit onwhat theywant(exceptperhapsforpeople whoearn more than a givenamountof perhaps 7,000 solesa month).Thatmoneywould enterthe economyinthe formof consumption,thusreactivatingthe productiveapparatus. The advantage of thissystemisthatit isfast and doesnotrequire bureaucraticexpensessuch as administeringthe foodbasketsthatthe governmentisgoingtogive to poor families throughthe country's municipalities authorities (andthusalsoavoidingthe corruptionthatits managementof thatmeasure mayentail). If the Peruviangovernmentdoesnotactmore proactively,the Peruvianeconomywill suffera deeprecession,especiallygiven the negative internationalenvironment.AndinPeru,the government,unlikemanyothercountries,hasthe possibilitytodo more andspendmore.Peru has a low inflationrate,alowfiscal deficit,large international reserves,andalow publicdebt. There isa Fiscal StabilizationFundforemergencycaseslike this.Andevenif itdidnothave it, we are ina momentof emergency,the world economy isinemergency,andgovernmentsall overthe worldare takingverydramaticeconomicmeasures. If the Peruvian governmentdoesnot take more radical measures,itseconomy will decrease more than whata negative external environmentpredicts, andwill create social discontent, givingargumentstoradical political sectors,justwhennextyearthere willbe apresidential election. Social unrestwillgive radical leftistpartiesashotinthe arm.
  3. 3. [1] See: https://gestion.pe/economia/coronavirus-fmi-ya-esta-claro-que-estamos-en-una-recesion-igual- o-peor-que-2009-nndc-noticia/?fbclid=IwAR2unOVXYomdtoKQpZd68iwz- cmykLU4WmzCD261pmCNSSLxDA4Ke8i2F0w [2] See: https://japantoday.com/category/politics/japan-plans-huge-stimulus-package-to- cushion-blow-from-coronavirus? [3] See for example: https://rpp.pe/economia/internacional/coronavirus-22-billones-de-dolares- senado-de-eeuu-aprueba-el-mayor-rescate-economico-de-su-historia-noticia-1254292 [4] https://www.ft.com/content/2c70c1d5-b14e-4584-bd32- bb674dde3d9a?fbclid=IwAR0pZWTZgSPwMZz2NHiienS3O1b6mqseNvODQfbn6i2b6hxhdbFBv8 Lydqk [5] See: https://asia.nikkei.com/Spotlight/Coronavirus/Malaysia-adds-53bn-of-coronavirus-stimulus-as- fiscal-pressure- mounts?fbclid=IwAR2Ev80NlCnSALbb6L5KNPd3RUIpKr14sRARrlvmsc6Jwy1evjDtQQUzcYc

×