China’s Evergrande crisis could cost a few points of Peru’s GDP

Monica Martinez

Lima, September 24 (EFE). – If the financial crisis of Chinese real estate giant Evergrande spreads to other sectors of that Asian economy, it could cost a few points of Peru’s GDP next year, which has already been corrected to 3 4%, said a source from the trade sector Efe.

“It is clear that the decline in growth in China will affect us very importantly, it can cost us some points of growth, in addition to reduced exports, especially from mining companies that are considered the most important and that are directed to China,” explained the head of the Institute of Economics and Business Development at the Chamber of Commerce Lima (CCL), Oscar Chavez.

“We may be affected by the low growth of 2022, in countries like Chile, Peru and Bolivia, but let us hope that the experience of 2007-2008 (in the United States) sheds light so that this crisis in China is well managed and does not expand and impact in our country,” Chavez added. , referring to the financial crisis in the real estate sector in those years.

Evergrande has debts of more than $300,000 million and must repay $37,000 million of loans in mid-2022, which has put hundreds of banks and finance companies in that country at risk.

The economist believes that the experience of 2008 should shed light so that the Chinese government, the Chinese central bank, resorts “to all the necessary policies to try to limit the impact and not spread it among the countries of the region, so that the financial system resorts to those that are affected that do not affect the real sector.”

To determine the impact of this crisis on the economies of this region, Chavez noted that it is necessary to know how many companies similar to Evergrande are currently in China.

In addition, he added that it is “a bit too hasty” to talk about the impact in emerging countries because “it is still necessary to determine the impact that will have within China.”

He pointed out that “the channel between China and Peru is on the trade side, but if this crisis is big, it affects other markets, and the financial channels will be affected, and capital flows and foreign investment that come to Peru can also be reduced.”

The Central Reserve Bank of Peru increased its forecast for GDP growth for this year to 11.9% due to the rise in the construction sector, but lowered that from 2022 to 3.4% due to lower expectations for private investment.

However, Chavez said growth this year will not be enough to recover from the hole. “We need to grow by about 5.5% in the second semester, it will not be possible to achieve it, but at least there are a large number of areas within the Peruvian territory that were already recovering from the 2020 crisis,” he said.

“The important capital that really comes to Peru is the capital of China, so the crisis that occurs in this economy will also subtract capital that can reach the country and be financed, for example, through agreements between governments. The important infrastructure that we require “, The expert explained. EFE

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