Peru’s Finance Ministry: Inflation will be 2% in 2024

Peru’s Finance Ministry: Inflation will be 2% in 2024

LIMA, Jan 2 (NNN-ANDINA) — Peruvian Economy and Finance Minister Alex Contreras forecast that inflation will be 2% in 2024. Thus, it will return to the target range (between 1% and 3%) established by the Central Reserve Bank (BCR).

“2023 has been atypical for the Peruvian economy, specifically in terms of prices. We faced the bird flu that impacted the price of chicken, El Niño Phenomenon that impacted the price of lime, Cyclone Yaku also had an impact on some agricultural prices. However, it has been possible to stabilize inflation, which in January was almost 9%, but now it closes December at 3%,” Contreras said.

The Cabinet member detailed thatunder this trend, inflation is forecast to close 2024 at 2%.

This does not imply that, eventually, some prices may register a temporary increase (…); and this is a merit of the BCR joined by the Ministry of Economy and Finance (MEF) on the fiscal policy side; we are going to have more stable prices,” he said.

Contreras asserted that there is a greater boost to economic activity, which will be consolidated thanks to the implementation of Plan Unidos (United Plan).

“Besides, we are always in constant communication with investors, whom we invite to come to Peru. There are more resources for order and security (purposes), which will help create an environment of greater tranquility and trust,” he said.

In that sense, the MEF’s head commented that the challenge of his administration in 2024 is for all confidence indicators to be in the optimistic range.

We have been able to achieve this in the case of the 6- and 12-month (ahead) indicators, but the major task is in the short-term indicators, in the three-month (ahead) expectations, which have remained pessimistic for four years,” he acknowledged.

Regarding the exchange rate, the Economy and Finance minister projected that the Peruvian Sol will remain a stable currency for 2024.

The BCR has the necessary mechanisms to moderate exchange rate fluctuations. Besides, a reduction in interest rates in the United States is also expected for 2024, which will help the Peruvian Sol maintain its strength, since, without any doubt, it is the most stable currency in the region,” he expressed.

In that sense, Contreras commented that there are conditions for 2024 to be a good year.

Stable U.S. dollar, inflation has gone down, investment is beginning to show recovery, both in the public and private spheres, projects are being awarded. We will continue to wait for El Niño phenomenon, which is the major challenge for the first quarter (of 2024), but the conditions are being met to generate prosperity in the country again,” he specified.

The MEF head affirmed that Peru has recorded the worst drop in income since the 1990s.

“In 2023, public sector income fell by 11%. Keeping the fiscal accounts in order implied two measures: either we (had to) raise taxes or we (had to) restrict spending and, in an economic context like the current one, raising taxes and adjusting spending were counterproductive,” Contreras indicated.

Therefore, he explained, the payment of profits was brought forward to December. — NNN-ANDINA

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