The number of COVID victims in Peru has been exacerbated by a lack of medical supplies, but BBVA Research expects its economy to grow by 12.2% in 2021, according to an article in the US magazine ‘Global Finance’.
Foreign direct investment would form a solid foundation for the continued economic recovery. It will also provide capital investment, technology transfer, and public revenue, he says. Raimundo Soto, Associate Professor of Macroeconomics and Econometrics at Pontificia Universidad Católica de Chile in Santiago.
Foreign direct investment decreased from $8.9 billion in 2019 to $3.1 billion in 2020. Therefore, the government is investing in technology. Peru has 12 free trade agreements with 58 countries, the most recent being the United Kingdom. The country launched a tourism revival plan and boasted of an inflation rate of 5.83% in the fourth quarter of 2021.
Prior to the pandemic, Peru attracted companies from various business lines: the Spanish energy company Repsol, the Canadian Bank of Nova Scotia through its Peruvian subsidiary Scotiabank, the food manufacturer Nestlé through its subsidiary Nestlé Peru, the manufacturer of Toyota cars through its subsidiary Toyota del Peru, the Chilean retail conglomerate Falabella and a number of national and foreign mining companies.
Peru generally offers strong property and contract rights protection; However, warns SotoThe new government’s nationalization plans are unclear:No one is sure if they will or not“.
With five presidents since 2016, Peruvian politics has become unstable. President Pedro Castillo and his Peruvian Liber party narrowly won the June elections with 50.13% of the popular vote, but faced a no-confidence vote, which was only temporarily overshadowed by a 7.5-magnitude earthquake on November 28. He says a nation is divided SotoAnd The struggle to enact groundbreaking reforms.
“The program of the new administration was based on some bold moves, one of which was to nationalize, or at least intervene heavily, the mining sector, one of the engines of the economy.“, he explains.”So there is a lot of uncertainty“.
The government also has ideas for land reform. But the actual plans are not clear, which creates uncertainty for the agricultural sector. In general, the political system in Peru is highly fragmented, with Party loyalties focus more on leaders than on ideology or politics.
The inexperience of the key players is another wild card. “Officials are not necessarily those who are able to understand the politics and management of government.“, Dice Soto. “Several ministers changed in a short time, which gave the impression that there was little consistency in the plans. [Castillo] It does not have a mechanism to develop a coherent set of measures“.
In addition, some mining operations have reportedly threatened to shut down due to environmental protests and the government has not granted some licenses due to similar concerns.
Taken together, these factors may recommend: Wait and watch the approach So far. As Soto points out: “It doesn’t cost you to watch and wait.”
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