Peruvian Export Growth Threatened by Cyclone Yaku, Social Conflict and the Global Economy

The director of the Economics and World Affairs Research Center of the Association of Exporters (ADEX), Edgar Vásquez, said that the growth in exports, estimated at 2.8% for this 2O23, will be conditioned by factors internal such as Cyclone Yaku and social conflicts; and external such as the failure of 2 banks in the United States, the global debt crisis and the largest increase in interest rates, among others.

“We need to be vigilant about the impact of Cyclone Yaku and the La Niña phenomenon affecting fishing and agriculture. In addition, social protests that would again lead to the closure of highways and airports, damage to public and private property and the halting of production could resume,” he said at the “Export Outlook” forum. Peruvian 2023”, organized by ADEX Consulting as part of the 50th anniversary of ADEX.

Likewise, the specialist explained that at the international level there is a systemic financial risk due to the failure of two banks in the United States (Silicon Valley Bank and Signature Bank), although being regional it would not cause the same crisis of 2008. Also, the rise in interest rates which generates indebtedness and tensions in the Asia-Pacific zone; and the escalation of the Russian-Ukrainian conflict.

Additionally, the executive reported that this year, national dispatches will total $64,941 million, of which $45,326 million will be traditional and $19,615 million will be non-traditional. “Primary shipments would only increase by 1% and value-added shipments by 7.3%. The most dynamic sectors would be metallurgy and fishing and aquaculture due to the greater demand for their destinations; and the one with the lowest growth would be the mining sector,” he said.

Even if value-added exports would be less dynamic than in 2022, agribusiness stands out with its 8.4% increase thanks to its diversified markets and products, with a variety in which organic products stand out.

Effective strategic planning should focus on assessing the situation of our main destinations -he continued-, if we are talking about mining exports, it is important to analyze what is happening in China; and in the case of non-traditional ones, look at what is happening in the United States, Europe and Latin America.

He also mentioned the projections of the Peruvian economy for this 2023 -Ministry of Economy and Finance 3.4%, the Central Reserve Bank 2.9% and private sector analysts 2.5%-, which in his opinion are insufficient rates because Peru needs to grow more than 5% in order to recover lost jobs.

“We must try to stabilize the social circumstances, with which Peru would position itself for the second consecutive year as one of the most dynamic economies in Latin America and the Caribbean,” Vásquez said.

The director of CIEN-ADEX said that Peru is a small economy but very integrated in the world, and its evolution as well as that of exports are linked to what is happening at the international level. “At the end of 2022, there was greater pessimism regarding the global economy; however, in the early months of 2023, there was a trend to overcome some of the risks,” he said.

“Controlling inflation is starting to show signs of success, it is generating better prospects; the logistical aspects are not reaching pre-pandemic levels, but there is clearly a general reduction in international freight, except for certain routes to Peru and other Latin American countries,” Vásquez said.

International organizations have revised their projections – he continued – this is the case of the International Monetary Fund which, in its report last January, improved its estimates and expects the world economy to grow by 2 .9% in 2023 and 3.1% in 2024.

“China would grow by 5.2% this year and the United States by 1.4%, which could be considered a minimal increase, but we are talking about the GDP of the largest economy in the world (the United States). United). 13% comes from its imports and Peru provides only 0.2% of the total. A growth of this magnitude (1.4%) would imply an increase in our shipments and generate opportunities,” said the ADEX expert.

Regarding international merchandise trade, Vásquez Vela said it will increase by 1.6% in 2023 and 3.4% in 2024. There is a reduction in global demand and this will affect developing economies which are less diversified. For this reason, sanitary and technical restrictions must be closely monitored, which goes beyond the multilateral order. Another issue is related to the security of supply chains.

“China influences the rise in the price of copper, Peru’s main export product, and it is possible that this year it will have better prices compared to 2022, which is paradoxical, since 2023 did not start well in due to stoppages that affected production. supply to meet demand. The positive point is that Las Bambas has already announced the normalization of its operations,” added the executive.

In turn, the vice-president of ADEX, César Tello Ramírez, indicated that the union seeks to promote spaces for the exchange of information between public institutions and exporting companies that aim to generate specific strategies in order to promote the development of the national productive fabric. and the country. .

“Based on 2022 figures, exporting companies numbered 8,203, which represents an increase of 6.7% compared to 2021 and represents an all-time high. In the breakdown, 59.5% of the total were micro enterprises, 32.4% small, 1.3% medium and 6.8% large, with which MSMEs concentrated 93.2% of the total,” explained the manager.

Exports reached a historic record in 2022 with an increase of 3.7% and exceeding 63 billion dollars; however, social circumstances caused a setback in the last quarter of 2022. It fell from an estimated double-digit growth to just 3.8%, exporting $5.4 billion less than expected.