Moody’s lowered its growth expectations for Peru’s economy in 2023 to 2.3%.

Risk Rating Agency Moody’s shown this Friday the economic growthor 2.3% in Peru this year, although he warned that “it is too early to determine the final effect of the anti-government protests” that erupted in December in the country and claimed the lives of 70 people.

“Moody’s Investors Services forecasts growth to date at 2.3% in 2023, though it is too early to determine the final effect of the protests given this is an ongoing event. However, January will clearly be negative for GDP growth. the agency said.

In his latest report on the consequences of the social crisis in Peru Moody’s noted that the economic impact will differ by sector and geographic location, given that the southern zone of the country was the epicenter of the protests and “where there was a significant slowdown due to roadblocks and road destruction.” both public and private.”

“The recovery for the remainder of the year, as well as the magnitude of these protests in economic growth and in certain sectors, will depend on their duration, given that this is an event that, although ongoing, has decreased in intensity,” he said.

How is the region?

He added that although the expected growth of the Peruvian economy is lower and “with a potential downward bias”, it still remains above the expected growth for other countries in the region, such as Colombia (1.5%), Mexico (2%) and Brazil. (0.7%).

Compared to the previous year, the agency assured that growth of 2.7% was “below expectations”, which is due “in part to the political and social crisis that occurred in 2022, coupled with the backlog from the pandemic” covid-19.

On the other side, Moody’swhich last January changed the outlook for the Peruvian government’s risk rating from stable to negative in the long term in both local and foreign currencies, stressed that Peru’s troubled social context is “lowering business expectations indices through 2023.”

However, he warned that a potential scenario of electoral change “could further dampen expectations as a result of the uncertainty that will arise about the future of the economy.”

By sector of the economy, he pointed out that the mining industry, which makes up roughly 10% of Peru’s GDP, is being affected by the temporary closure of the San Rafael tin mine, located in the sleepy Puno region adjacent to Bolivia and stronghold-government protests.

Also due to lower copper production at the Las Bambas, Antapakkay and Constantia mines due to the blockade of the so-called Southern Mining Corridor.

This, as specified, puts about 30% of the country’s copper production at risk, while the sector “might not invest about $ 2 billion allocated for 2023.”

Besides, Moody’s estimated that the construction sector would be hit with a preliminary 3% contraction and named the tourism sector as one of the most limited, with losses exceeding 1,700 million soles (about $445 million), according to the Lima Chamber of Commerce.

(EFE)