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Perú Macroeconomic Performance and Perspectives

Perú Macroeconomic Performance and Perspectives. Luis Carranza Ugarte Ministry of Economy and Finance April, 2009. Ministerio de Economía y Finanzas. 1. 1. Global Economic Environment. The international scenario worsens …. Consumer Confidence Index University of Michigan

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Perú Macroeconomic Performance and Perspectives

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  1. Perú Macroeconomic Performance and Perspectives Luis Carranza Ugarte Ministry of Economy and Finance April, 2009 Ministerio de Economía y Finanzas 1 1

  2. Global Economic Environment

  3. Theinternationalscenarioworsens… ConsumerConfidenceIndex University of Michigan (January 1966 = 100) Non-FarmPayrolls (Thousands) Source: Conference Board Source: Bureau of Labor Statistics Light-WeightVehicle Sales (Millions) Case-ShillerIndex 3 Source: US Department of Commerce Spurce: Standard and Poors

  4. In themiddle of a fast and pronounced stock-exchangefall…. Standard & Poors 500 Index(Monthly Percent Change) Months Source: Bloomberg

  5. Withuncertainty in markets… Volatility Index (VIX) TED Spread Baltic Dry Index - BDI (BALDRY)

  6. Impact of Financial Crisis in Peru

  7. Through lower commodity prices Source: MEF

  8. Impact of global crisis on the Peruvian economy GDP

  9. Financial Impact: stable exchange rate Currency Devaluation in Latin America(Annual percentage change of daily data) Chile 34.2 Brasil 31.1 México 35.5 Colombia 28.5 Argentina 16.3 Perú 12.1 Source: Bloomberg • Sound Stability of the Exchange Rate

  10. Financial Impact: Country Risk performing well EMBI spread in Latin America(Spread above the US Treasury, in basis points) Panamá 475 Colombia 475 Brasil 428 Perú 399 México 369 Source: Bloomberg

  11. Consensus: Peru outperforms in the real sector Regional Inflation (Annual percentage change of CPI) Regional Growth (Annual percentage change, in real terms) Source: LatinFocus

  12. Impact on Domestic Demand Overall Demand (Annual percentage change, in real terms) Source: BCRP

  13. Impact on labor Employment in Rest of Urban Cities (Average annual percentage change) Employment in Lima (Average annual percentage change) Source: BCRP

  14. Inflation is starting to fall PPI Agricultural Products (Annual percentage change) CPI: Food Products (Annual percentage change) Imported Domestic Imported Domestic Source: INEI

  15. Peru’s Economic Strengths

  16. Because of our macroeconomic strength Devaluation since 01/09/08 Reserves / GDP 2008 Source: BCRP

  17. Outstanding performance of the capital expenditure Non Financial Expenditures of Central Government(Annual percentage change, in real terms)

  18. Low interest rates favor investment Domestic Currency Sovereign Yield Curve(Percentage) Source: Bloomberg

  19. Aggressive monetary easing Inflation(%) Reference Rates(%) Source: Bloomberg

  20. Financial System Structure Big Size Banks Local Government S&Ls Rural S&Ls Saving and Credit Cooperative Financial Companies Medium Size Banks Small Size Banks Assets 39,218 3,989 2,381 219 433 384 291 Share of total 84% 9% 5% 0% 1% 1% 1% Liquid Assets 37% 24% 22% 16% 21% 10% 7% Net Loans 56% 67% 68% 77% 71% 82% 83% Deposits - With the public 66% 57% 55% 63% 62% 0% 0% - Financial System 6% 7% 5% 3% 2% 0% 10% Due to Banks 12% 17% 14% 12% 17% 72% 52% Bonds 4% 3% 3% 0% 0% 0% 15% Source: SBS, September 2008

  21. Peru’s strengths and weakneses • Macroeconomics is OK, but infrastructure and education are the long-run challenges. Peru: Competitiveness Indicators (ranking)  Competitive Advantages Good economic performance and adequate economic policy  Competitive Disadvantages Legal and social issues Source: WEF

  22. Peru’s Economic Plan

  23. Plan Objectives

  24. Main features of the economic plan CreditCrunch Unemployment Uncertainty Liquidityshortage Infrastructure Financing CreditLines Infraestructure Construction PublicGuaranteeFunds Monetary Policy Retraining Labor programs

  25. Lines of action: Execution Strategy Permanent Support and Consulting Table (MEF, Consucode, DNPP, DNEP) Project Portfolio Selection SupportCellsFormation SC Project Diagnosis • Bottlenecks identification • Definition of Responsibilities • Definition of deadlines Execution plan for each project along with the execution unit • Criteria • ApprovedBudget • MaturingDegree • EconomicImpact • Execution Office Capacity SC and AG accompany the execution constantly • SkilledMembers • SNIP • Consucode • Budget Office Goal: Improve execution performance of programmed Investment Formation of External Advisory Group AG Project Production Line Development

  26. Lines of action: Project Selection

  27. Amounts contained in the plan

  28. Forecasts and Long Term

  29. Sustainable external accounts balance

  30. Public investment important role Overall Demand and Supply (Annual percentage change, in real terms) Source: MEF

  31. Operations of the Non-Financial Public Sector(As a percentage of GDP) Fiscal stimulus: public investment Anti-Crisis Plan (US$ 2,500MM) Financing Plan

  32. Perú Macroeconomic Performance and Perspectives Luis Carranza Ugarte Ministry of Economy and Finance March, 2009 Ministerio de Economía y Finanzas 32 32

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