“Difficult year” awaits the regional economy before the resumption of protests, the expert believes

AND difficult year for the regional economy. According to the director of the economics program at the University of Lima, Peter Grades Smithto roadblocks and protests that are being recorded in southern regions such as Arequipa, Puno and Cuscoagainst the government of Dina Boluarte.

AT Air Rotary, Smith degrees strengthened it economic forecasts citing as an example the situation that Cusco is experiencing in the context of the socio-political crisis, since, according to Cusco Chamber of Commercethe region is losing around S$7 million daily as a result of protests because tourists choose to cancel their bookings.

economist He also mentioned that Puno is facing a similar scenario as the Virgin of Candelaria 2023 – which is considered the most important and tourist destination in the region – is in danger of being canceled after the official presentation of the holiday was suspended due to 17 deaths recorded on Monday, January 9, in Juliaca.

According to the Peruvian Association of Travel and Travel Agencies (Apavit-Puno), a total of 11 million soles would not have been collected if all the dates of the celebration Virgin of Candelaria.

Central Reserve Bank (BCR) has estimated that cancellations in this sector imply an impact of around $100 million per month.

In addition to flight cancellations, Degrees He said that there is a mobilization “effect” that is little mentioned: a factor of confidence in the country, which can have a serious impact on the national economy, not only because of the income received from tourism, but also in the possible reduction in international investment.

“This is a difficult year. […]. More than 90% of travel bookings in southern Peru have been cancelled. There are no tourists, hotels are closing, jobs are being cut, etc., but there is an effect that we do not measure: a matter of trust. If someone has planned their vacation and needs to change it, they will not necessarily recommend Peru,” he said.

External factors that may affect the economy of Peru

To social problems arose in the second week of December 2022 after an attempted coup d’état former President Pedro CastilloAdded to this is a slowdown in the global economy, a recession in Europe and stagnation in the US, external factors that may affect national exports.

Smith degrees He said that these international factors will have implications for the national economy and will also mean that, unfortunately, the problems of employment and poverty cannot be solved “at the pace that we would like.”

“The problem may worsen in the most vulnerable sectors due to the slowdown in the global economy and the fact that domestic political and social problems will affect the economy; therefore, it also implies not solving the problems of poverty and employment at the pace that we would like,” he concluded.

BCR and its forecasts

Adrian Armas, central manager of economic research BCRargues that it is not yet possible to give accurate data on the impact on GDP due to demonstrations and roadblocks in the country, but the impact on various economic activities in the southern regions is obvious.

“It is premature to give a figure of the possible impact. There are transport problems, imports overland, there is also a break in trade, there is a break in terms of canceling international inbound tourism at about $100 million a month. “, he explained.

Representative BCR He pointed out that these shutdowns will affect inflation in the affected regions, especially perishable products.

“In January, we see pressure on perishables continuing. It is noted that the stores have been closed, not even to determine the prices, because many stores are closed, the problems we have in the south are causing a significant increase,” commented.

The weapon even indicated that in CuscoFor example, a kilogram of chicken has increased from 12 to 16 soles due to the fact that the supply in the markets has decreased.

It is worth noting that inflation at the end of December 2022 in the amount of 8.46% was higher than expected BCR.

For now, the central bank reiterates that inflation in the country will begin to decline from March, especially due to falling global prices and lower import cargo.

“Inflation expectations are indeed at the level of 4.1% and 4.5%. The bank’s forecasts suggest that these inflationary expectations should decrease, especially from March,” he added.