Waldo Mendoza warns that the “long cycle” of Peruvian economic growth is “over”.

Former Economy and Finance Minister Waldo Mendoza warned this Sunday in a column published in the newspaper. Tradewhat a long cycle Peruvian economic growth “ended” due to factors such as political crisis that crosses the country and paralysis private investment.

In my opinion column former head of the MEF accused Pedro Castillo’s government and Congress of creating “the most tense and prolonged atmosphere of uncertainty” since the end of the government Alberto Fujimori.

“The long cycle of relatively high sustained economic growth that Peru has experienced over the past three decades is over. Am I exaggerating? There are three alarms that are already being observed today,” he said. Mendoza by listing the factors.

Arguing his opinion, the former minister named three “alarm signals”. In first place is “an expected decline in private investment this year and near-zero growth next year.”

As a second factor, Mendoza warns, in 2022, and for the first time in this century, except for 2020, Peru will be in the “bottom third of Latin America and the Caribbean (LAC)”. In 2001-2021, we averaged in the top five. From the top fifth to the bottom third of growth: Castillo’s first legacy.

“Third, the investment confidence in Apoyo Consultoría, excluding 2008 and 2020-2021, the international crisis and the pandemic, respectively, is at its lowest level since 2004,” he said.

Opportunities for a ‘private investment revival’ in Peru are ‘zero’

In this line Mendoza In his assessment, the outlook for the future is daunting, given the “zero” chance of a resurgence of private investment, the most important determinant of economic growth.

Former government member Francisco Sagasti (2020-2021) indicated that the uncertainty faced by businessmen invest today similarly Peru late 1980s Although hyperinflation used to “cloud the vision of businessmen”, today it political crisis which makes investment difficult.

“Entrepreneurs today and then have no idea what the next semester will be like. The current ones are wondering: will they leave the president? And if they don’t release him, will he continue to rule as he has been up to now?

Same way, Mendoza He emphasized that the promotion of an important private investment project is impossible without the help of state human capital. Thus, he criticized the appointment of people who do not meet the relevant profile at the head of important state institutions.

“We have the technology to create new engines of growth. In practice, the human capital of the state was dismantled for this. Am I exaggerating? Two examples that indicate that this government is contesting the title of the worst government against Garcia I,” he said.

Waldo Mendoza called the case Petroperú and recalled that in September 2021, Hugo Chávez was appointed CEO of a state-owned company and that on March 2 this year, due to “lack of access to information”, PVC “refused to check the financial statements of Petroperú”.

“In this regard, a few days later, S&P downgraded Petro-Peru’s long-term debt rating to junk. In September, Fitch did the same. As a result, Petro-Peru became a pariah in the credit markets, and local banks were reluctant to lend to it until it ran out of liquidity to pay for imported fuel. The government had to organize a rescue. The grace of electing incompetent directors was worth nearly a point of GDP,” he wonders.

As the second case, Mendoza mentioned the situation with Ministry of Transport and Communications (MTC). According to the former minister, “in January-October of this year, compared to the same period last year, MTC investments in real terms fell by 29%, almost like in a pandemic!”

“What to do with political uncertainty and depreciated state capital, which paralyze private investment and sustainable economic growth, and, consequently, the economic progress of the country? Could you help me with an answer?” he concluded.