Message to the Nation: President Pedro Castillo assures that the country’s economy continues to develop, despite the fact that the numbers and forecasts do not say so.

message to the nation President of the Republic, Pedro Castillo, included the economic balance of the measures taken by his administration over the past 12 months.

Although lately Central Reserve Bank (BCR) lowered the country’s economic growth forecast from 3.4% to 3.1% due to mining conflicts, the head of state assures that the Peruvian economy continues to develop.

“So far in 2022 we have grown by 3.5%, as indicated by BCR and despite the pandemic, we are also above the regional average. Similarly, among developing countries, we also exceeded the economic growth forecast by 2.5% for 2022,” he said at the beginning of his state of the nation address.

Data from the Institute for Social and Economic Research even warns that although the economy grew by 3.5% from January to May of this year, the progress made is getting smaller every month (see chart).

For example, in January there was an increase of 2.9%, and in February there was an increase of 4.9%, but after this month, each GDP growth is lower and lower. In March, national production rose to 3.8%, in April to 3.7%, in May to 2.3%, i.e. we would face economic downturn.

Although the National Institute of Statistics and Informatics (INEI) indicates that more than 8.5 million Peruvians live in the country. poormore than 6 million 490 thousand that existed before the pandemic, the president assures that during his reign, about one million 270 thousand people came out of poverty.

“And they also came out of extreme poverty 309,000 Peruvian men and women,” the president said.

Poverty fell just 1.26% last year compared to 2020, and extreme poverty fell just 1% from what was recorded at the height of the pandemic. The INEI report recalls that until the end of 2021, the population is still 2.07% poorer than in 2019.

even BCR pointed out in the report that high inflation could reduce the likelihood of a household being classified as non-poor as spending increases. Inflation is currently at 9.32% nationwide, the highest level in 10 years.

As far as employment is concerned, Lock He argued that pre-pandemic employment levels had rebounded, not taking into account that more than 70% of jobs in the country are informal.

“We have restored employment levels, which currently exceed 5.5 million jobs. Official employment at the national level increased by 6.9% year on year as of May this year, and with it 352,000 jobs were restored. I must emphasize that this positive result highlights that pre-pandemic levels have already been exceeded and accumulated by 14 months of continuous growth,” he assured.

Despite this progress, until the first quarter of 2022, INEI indicated that only 23.9% workers in the country they were formal, 3.4% less than in 2020.

For its part, the Institute for Socio-Economic Research reports that in March 2022, 245,000 more jobs were registered than in 2019, due to the fact that there were approximately 611,000 fewer adequate jobs and 855,000 more underemployment.

It is worth noting that people who are in a situation of part-time work do not work the number of hours prescribed by law and earn less. minimal salary.

exemption from VAT

Another point that the president recalled in his message to the nation was the actions he took to support Peruvians with fewer resources before price increase. The head of state explained why the IGV benefit did not work properly.

“In order to cope with rising prices for the main products of the main family basket, 5 products and their main inputs were temporarily exempted from the general sales tax, in order to reduce prices, as happened with 90% of gasoline. “However, it has become clear that the unscrupulous practices of some businessmen prevented these fiscal measures and efforts from being reflected in their true scale,” he said.

Three months after the application of the measure goods without VATlike chicken, eggs and bread continued to rise. Only until mid-June, BCR analysis showed that this measure had more impact on supermarkets than markets.

As indicated, the prices of goods exempt from IGV decreased by 14-16% during the first week of May. But in supply markets, where most of the population goes in poverty, the IGV exemption only reduced product prices by up to 3%. food.

Mining

On the other hand, Castillo acknowledged the importance of mining for Peru’s economy, predicting that investment in the sector will reach $5.3 billion this year.

However, for the National Society of Mines, Petroleum and Energy (SNMPE) the scenario is not as optimistic as they have warned that investors they lose faith in the country’s ability to promote mining projects due to the fact that the executive branch does not cope with social conflicts.

The president also indicated that private investment this year will reach $44 billion, assuring that it will be “a record similar to last year’s and that it will be key to further recovery of manufacturing activity and employment.” But BCR currently predicts that private investment will have a growth of 0%.