秘魯經(jīng)濟(jì)展望-英

Peru

EconomicOutlookOctober

2023Contents01

International

context:

activity

and

financial

markets02

Local

context:

activity

and

employment03

Global

economy

forecasts04

Peru

economy

forecasts4.1

Economic

activity4.2

Fiscal

balance

and

public

debt4.3

External

sector

and

exchange

rate4.4

Inflation

and

monetary

policy05

The

main

risks

toPeru's

economic

outlook06Summary

of

macroeconomic

forecastsBBVA

Research

/

Peru

Economic

Outlook-

October,

20233Key

pointsGlobalsituationThe

world

economy

is

slowing

down

with

differences

between

regions:

recent

data

are

morepositive

in

the

U.S.,

relatively

weak

in

the

Eurozone,

and

particularly

negative

in

China.

The

processof

interest

rate

hikes

seems

to

have

reached

its

end.

However,

given

the

still

high

inflation

androbust

labor

markets,

the

Fed

and

the

ECB

have

left

the

door

open

to

further

interest

rate

hikesshould

inflation

prove

to

be

more

persistent.LocalsituationLocally,

the

economy

continues

to

face

negative

shocks.

The

drought

and

higher

fertilizer

prices

in2022

(with

impacts

on

agricultural

sector

production

this

year),

political

and

social

unrest,

andcyclone

Yaku

in

the

first

quarter

were

followed

in

the

second

quarter

by

weather

anomaliesassociated

with

the

coastal

El

Ni?o

phenomenon,

with

an

intensity

even

greater

than

predicted

byentities

specialized

inmonitoring

this

phenomenon.

In

this

environment

of

successive

negativeshocks,

high

inflation,

high

financing

costs,

absence

of

additional

releases

of

pension

funds,expectations

of

a

complicated

El

Ni?o

phenomenon

in

the

coming

quarters,

and

in

which

short-termbusiness

confidence

has

failed

to

recover,

spending

by

the

private

sector

has

weakenedsignificantly.

In

addition,

firms

have

opted

to

cut

inventories.

As

a

result,

GDPcontracted

0.5%year-on-year

in

the

second

quarter,

a

larger

drop

than

we

estimated

in

our

previous

report

(June).The

situation

does

not

seem

to

have

improved

much

in

the

third

quarter

and

analysts

andauthorities

alike

are

adjusting

their

output

growth

forecasts

downward

for

2023.BBVA

Research

/

Peru

Economic

Outlook-

October,

20234Key

pointsGlobal

growth

is

forecast

to

moderate

from

3.5%

in

2022

to

2.9%

(no

change

with

respect

to

theJune

forecast)in

2023

and

3.0%

(2.9%

in

June)

in

2024.

In

the

U.S.,

strong

domestic

demandsupports

an

upward

revision

of

output

growth

forecasts

and

makes

a

recession

unlikely.

In

China,growth

prospects

deteriorate,

but

the

implementation

of

economic

measures

are

expected

to

avoida

sharp

slowdown.

In

the

Eurozone,

economic

expansion

is

expected

to

be

more

modest

thananticipated.Global

macrooutlookInflation

is

likely

to

continue

to

slow,

avoiding

further

interest

rate

hikes

in

the

U.S.

and

theEurozone.

Even

so,

it

will

remain

above

target

and

upside

risks

will

remain,

making

rate

cutsunlikely

in

the

near

term

and

favoring

a

gradual

reduction

in

liquidity.BBVA

Research

/

Peru

Economic

Outlook-

October,

20235Key

pointsOn

the

domestic

side,

the

baseline

forecast

scenario

has

been

revised

to

incorporate

the

negativesurprise

in

second

quarter

GDP

growth,

the

deterioration

of

El

Ni?o

forecasts

for

the

second

half

ofthe

year,

and

a

more

sustained

weakness

in

private

spending.

Taking

this

into

account,the

outputgrowth

forecast

for

2023

has

been

cut

to

0.4%

(1.6%

in

June).Domesticmacro

outlook:economicactivityThis

forecast

considers

a

second

half

of

the

year

in

which

activity

will

showsome

improvement(expansion

of

just

over

1.0%

year-on-year

versus

the

0.5%

contraction

in

the

first

half),

supported

bya

relatively

more

stable

political

situation

with

respect

to

what

was

observed

at

the

beginning

of

theyear,

higher

public

spending

focused

on

mitigating

the

impacts

that

the

coastal

El

Ni?o

will

have

inearly

2024,

declining

inflation,

and

domestic

currency

interest

rates

starting

to

decrease.

The

abovewill

be

mitigated

by

Quellaveco's

declining

contribution

to

economic

growth,

which

will

dissipatestarting

in

4Q23.

It

should

be

added

that

the

continued

weakness

of

GDP

at

the

beginning

of

thesecond

half

of

the

year

has

elevated

the

downside

risk

to

this

scenario.For

2024,

the

output

growth

forecast

has

also

been

revised

downward,

from

2.6%

to

2.3%.

Thecoastal

El

Ni?o

will

probably

unfold

in

the

first

months

of

that

year

with

moderate

intensity,

not

weakas

was

considered

in

the

base

scenario

of

June,

so

that

rainfall

will

be

higher

and

economic

impactswill

also

be

greater.

After

El

Ni?o

(negative

supply

shock

dissipates),

there

will

be

a

rebound

ineconomic

activity.BBVA

Research

/

Peru

Economic

Outlook-

October,

20236Key

pointsPeru

will

remain

fiscally

robust,

although

we

now

foresee

a

somewhat

higher

deficit.

For

this

year,

thedeficit

will

stand

at

around

2.7%

of

GDP,

up

from

the

June

forecast

(2.4%),

mainly

due

to

a

downwardDomesticmacro

outlook:

revision

in

projected

mining

revenues

and

a

sharper

slowdown

in

private

spending.

By

2024,

the

fiscalfiscal

accounts

deficit

will

remain

at

2.7%

because

although

revenues

will

fall

(as

a

%

of

GDP)

due

to

the

expecteddecline

in

metal

and

fuel

prices,

expenditures

will

also

fall

due

to

the

withdrawal

of

the

support

givenin

2023

related

to

the

“Con

Punche

Peru”

plans.

In

this

context,

gross

public

debt

will

be

somewhatbelow

35%

of

GDP

by

the

end

of

2024.The

Peruvian

economy

does

not

present

external

imbalances,

making

it

easier

to

face

the

financialvolatility

that

has

been

observed

in

the

context

of

still

high

foreign

interest

rates.

The

balance

ofpayments

current

account

deficit

(accumulated

over

the

last

four

quarters)decreased

from

4.0%

of

GDP

in4Q22

to

1.9%

in

2Q23

due

to

increased

miningproduction

(more

exports)

and

the

slowdown

in

privatespending

(fewer

imports).

We

expect

the

current

accountdeficit

to

maintain

this

trend,favored

by

anDomesticmacro

outlook:externalaccountsexpected

normalization

of

inbound

tourism,

reaching

a

level

equivalent

to

1.2%

of

GDP

by

theend

of

2023and

1.0%

in

2024.Depreciation

pressures

on

the

local

currency

in

the

last

couple

of

months

dueto

high

USD

interestrates

and

the

prospects

that

they

will

remain

high

for

quite

some

tim

e,as

well

as

the

loss

of

dynamism

ofeconomic

activity

in

China.

We

expect

the

PEN

to

weaken

somewhat

further

going

forward

due

to

the

startof

the

(gradual)

normalization

process

in

the

domestic

policy

rate,

which

will

reduce

the

PEN-USD

interestrate

differential

(decreasing

the

attractiveness

of

holding

local

currency

assets).

The

lower

balance

ofDomesticmacro

outlook:foreignexchangepayments

current

account

deficit

will

moderate

depreciation

pressures.We

expect

the

USDPEN

to

closethe

year

between

3.70

and

3.80

soles

per

dollar

(perhaps

at

the

high

end

of

that

range)

and

between3.80

and

3.90

by

the

end

of

2024.BBVA

Research

/

Peru

Economic

Outlook-

October,

20237Key

pointsAlthoughstill

at

high

levels

(5.0%

in

September),

inflation

is

decreasing.

Base

effects,

the

weakness

of

theeconomy,

and

the

tight

monetary

policy

stance

suggest

that

this

trend

will

continue

in

the

followingmonths,

closing

the

year

at

around

4.1%.

In

2024,

when

El

Ni?o

is

over,

inflation

willresume

itsdownward

trend

and

end

the

year

at

2.8%.Domesticmacro

outlook:inflationAfter

a

pause

since

February,

the

Central

Bank

reduced

its

policy

interest

rate

in

September

(25

bp)to

7.50%.

This

took

place

in

a

context

in

which

it

revised

its

output

growth

and

core

inflation

outlookdownward

for

2023.

However,

thestatement

accompanying

the

decision

also

stressed

the

latent

risk

oftheimpacts

that

El

Ni?o

may

have

on

prices

and

that

thecut

in

thepolicy

ratedoes

not

imply

thebeginning

ofa

cycle

ofsuccessive

reductions.Domesticmacro

outlook:monetarypolicy

rateAs

indicated

by

theCentral

Bank,

the

next

decisions

it

willtake

will

be

conditioned

by

the

data

availableover

time.

We

anticipate

that

inflation

and

economic

activity

trends,

weather

forecasts,

and

the

Fed'sdecisions

will

be

decisive.

Our

baseline

scenario

is

consistent

with

further

cuts

in

the

policy

rate

to6.75%

by

the

end

of

the

year

and

then

a

pause

while

the

El

Ni?o

shock

lasts

into

early

2024

and

theFed

does

not

start

its

own

monetary

normalization

cycle.Main

risksOn

the

external

side,

(i)

episodes

of

recession

and

financial

instability

caused

by

persistent

inflation

andtight

monetary

policies;

(ii)

a

sharper

slowdown

in

China;

(iii)

geopolitical

tensions;

and

(iv)

theU.S.presidential

elections.

On

the

domestic

side,

(i)El

Ni?o

of

greater

intensity

or

with

more

significantimpacts;

(ii)

renewed

political

and

social

tensions;

(iii)

populist

measures

affecting

competitiveness

(labormarket,

pension

system);

and

(iv)

a

more

persistent

cyclical

(structural?)

slowdown

in

economic

activity.01Internatio

na

l

context:activity

and

f

inancialmarketsBBVA

Research

/

Peru

Economic

Outlook-

October,

20239GDP

growth

is

losing

momentum,

mainly

in

China,

but

also

in

the

Eurozone;labor

markets

and

excess

savin

gs

are

still

supportive,

especially

in

the

USGDP:

REAL

GROWT

H

(*)(Q/Q

%)2Q23

growth:significantlyhigher

than

expected2Q23

growth:slightly

lowerthan

expected2Q23

GDP:

significantlylower

than

expected(*)

BBVA

Research

growth

estimation

for

3Q23.Source:

BBVA

Research

based

on

data

from

Haver.BBVA

Research

/

Peru

Economic

Outlook-

October,

202310The

service

sector

is

losing

some

of

its

strength,

adding

to

the

weakness

inmanufacturing;

labor

markets

remain

robust

despite

the

recent

moderati

onPMI

INDICAT

ORS:

MOST

RECENT

FIGURES(*)UNEMPLOYMENT

RATE

(*)(MORE

THAN

50:

EXPANSION;

LESS

THAN

50:

CONTRACTION)(%

OF

THE

LABOR

FORCE)(*)

Most

recent

data:

Aug/23

in

the

U

S,

Jul/23

in

China

and

in

the

EZ.

Pre-pandemic:2019

average.Historic

low:

lowest

level

since

Jan/04Source:

BBVA

Research

based

on

data

from

Haver.(*)

Most

recent

data:Aug/23

in

China.Sep/23

in

the

USand

in

the

EZ.Source:

BBVA

Research

based

on

data

from

Haver.BBVA

Research

/

Peru

Economic

Outlook-

October,

202311In

flation

has

been

slowing

thanks

to

base

effects,

easing

of

bottlenecks

anddeclining

commodi

ty

prices

(despite

the

recent

oil

upward

trend)INFLAT

ION:

CPICOMMODITY

PRICES(Y/Y

%)(Y/Y

%,

30-DAYS

MOVING

AVERAGE)oil

prices

raised

25%

in

last

three

months

onsupply

cuts,

but

remain

over

2022

levelsSource:

BBVA

Research

based

on

data

from

Haver.Source:

BBVA

Research

based

on

data

from

Haver.BBVA

Research

/

Peru

Economic

Outlook-

October,

202312Core

inflation

remain

s

sticky

at

high

levels,

also

fueled

by

(limited)

somesecond-round

effectsCORE

INFLAT

ION:

CPIWAG

E

GROWT

H(*)(Y/Y

%)(Y/Y

%,

QUARTERLY

DATA)(*)

US:

Atlanta

WageTracker;

3Q23

data

represents

data

for

Aug/23

only.

EZ:

negotiated

wages.Source:

BBVA

Research

based

on

data

from

theFed

and

Eurostat.Source:

BBVA

Research

based

on

data

from

Haver.BBVA

Research

/

Peru

Economic

Outlook-

October,

202313Fed

and

ECB

rate

hike

cycles

seem

to

be

over,

but

doors

are

open

for

extraraises

if

inflation

surprises

upwards;

PBoC:

(small)

rate

cuts

to

back

growthPOLICY

INTEREST

RAT

ES

(*)(%)US

AN

D

GERMAN

SOVEREIGN

YIELDS:

2Y

AND

10Y(%)(*)

Ref

i

rates

in

the

case

of

the

ECB.Source:

BBVA

Research

based

on

data

from

Bloomberg.Source:

BBVA

Research

based

on

Bloomberg.BBVA

Research

/

Peru

Economic

Outlook-

October,

202314Despite

higher

interest

rates

and

a

stronger

US

dollar,

financial

tensionsremain

relatively

low;

the

US

banking

turmoil

has

easedUS

DOLLAR

INDEX:

DXY(%)BBVA

RESEARCH

FINANCIAL

TENSIONS

INDEX(INDEX:

HISTORIC

AVERAGE

=

0)USDappreciation(*)

Ref

i

rates

in

the

case

of

the

ECB.Source:

BBVA

Research

based

on

data

from

Bloomberg.Source:

BBVA

Research

based

on

Bloomberg.BBVA

Research

/

Peru

Economic

Outlook-

October,

202315Flows

to

emergin

g

markets

recede,

currencies

in

the

region

weaken...CAPIT

AL

FLOWS

TO

EMERGING

MARKETSLAT

AM:

EXCHANGE

RATE(USD

BILLIONS,

28-DAY

ROLLING

AVERAGE)(LOCAL

CURRENCY

VS.

USD,

INDEX100

=

DEC

2021)Capital

inflow

sEnd

2Q2303/10/2023

Accum.vs.30/06/2023*

Year*(%)(%)-15.60.41.14.94.6-7.07.713.56.9Capital

outflow

s-2.0*Positive

sign:

depreciation.Negative

sign:

appreciationSource:

IIF

(information

as

at

September

27).Source:

Bloomberg

(information

as

at

October

3).BBVA

Research

/

Peru

Economic

Outlook-

October,

202316...

and

the

required

yield

on

sovereign

debts

increases,

while

in

Peru,

inparticular,

holdings

of

sovereigns

by

n

on

-residents

decrease.LAT

AM:

SOVEREIGNBOND

YIELDSPERUSOVEREIGNBOND

HOLDINGS

BY

NON-10

YEAR

(%)RESIDENTS

(PEN

BILLIONS)03/10/203

Accum.vs.30/06/2023

year(bpbp)96-85-68-5499108PERUSOVEREIGNBOND

HOLDINGS

BY

NON-RESIDENTS

(%

OF

TOTAL

BALANCE)Dec-21

Mar-22

Jun-22

Sep-22

Dec-22

Jun-23

Jul-23

Aug-2349.447.846.043.541.139.137.936.6Source:

Bloomberg

(information

as

at

October

3).Source:MEF02Local

context:

activityand

employmentBBVA

Research

/

Peru

Economic

Outlook-

October,

202318Econ

omic

activitycontracted

again

in

the

second

quarter

of

the

year,

in

anen

vironment

of

adverse

w

eather

conditionsGDPGDP

BY

PRODUCTIVE

SECTORS

IN

2Q23(Y/Y

%

CHG.)(Y/Y

%

CHG.)Jul-23Chronology

of

shocks:Politicaland

socialupheavalGDP-1.31.8PrimaryCycloneYacuCoastalEl

Ni?oFertilizer

deficitand

drought-0.7-47.913.3-1.6Jan-July

23:

-0.6%-18.5Non-primary-2.1-12.2-8.83.01Q23:

-0.4%

2Q23:

-0.5%0.3Source:

BCRP

and

BBVAResearchSource:

BCRP

and

BBVAResearch.BBVA

Research

/

Peru

Economic

Outlook-

October,

202319In

accordance

with

the

deterioration

of

non

-primary

sectors,

domesticdeman

d

continued

to

fall,

particularly

due

to

lower

private

spendingDOMESTIC

DEMANDPRIVAT

E

EXPENDITURE(Y/Y

%

CHG.)(Y/Y

%

CHG.)Spending

contraction

explained

by

theweakness

of

private

investmentPUBLICEXPENDITURE(Y/Y

%CHG.)Source:

BCRP

and

BBVAResearchSource:

BCRP

and

BBVAResearchBBVA

Research

/

Peru

Economic

Outlook-

October,

202320Available

indicators

show

in

balance

that

econ

omic

activity

in

the

thirdquarter

remained

w

eakAVAIL

ABLE

ACT

IVIT

Y

INDICAT

ORS(Y/Y

%

CHG.)ELECTRICITYPRODUCTIONPUBLIC

INVESTMENT

16.05.222.914.64.64.33.44.13Q23:

3.22.33.23.01.9-12.82.60.8-11.23Q23:

-15.5-2.5-13.3CONSUMER

BIG

DATA

INDEX2BIG

DATA

INVESTMENT

INDEX312.813.06.65.14.02.23.23.40.1-2.0-6.33Q23:-8.43Q23:-2.0-8.8-10.3-3.2-3.2-3.0-5.3-7.31/

Data

f

or

September

isestimated.2/

Uses

data

on

the

amountofcreditand

debit

card

purchases

made

by

households

and

cashwithdrawals

through

ATMs

and

teller

windows.3/

Uses

informationon

payments

into

accounts

ofselected

companies.Source:

INEI,

BBVA

Research.BBVA

Research

/

Peru

Economic

Outlook-

October,

202321Confidence

shows

no

maj

or

improvemen

t

in

3Q23BUSINESS

CONFIDENCE1(POINTS)CONSUMER

CONFIDENCE(POINTS)1:

Three-month

economicoutlook.Source:

BCRP.Source:

Apoyo

Consultoría.BBVA

Research

/

Peru

Economic

Outlook-

October,

202322In

the

context

of

weak

activity,

empl

oymen

t

at

the

national

level

contractedmore

sharply

in

the

second

quarter

of

the

yearEMPLOYMENT

AT

NAT

IONAL

LEVEL

1(Y/Y

%

CHG.,

3-MONTH

MOVING

AVERAGE)In

2Q-23:By

sector,construction

showed

the

largestdecline

(-13.1%).By

company

size,

the

smallest

(1

to

10

workers)were

the

most

affected.Drop

of

163,000peoplecompared

toJune

2022By

worker

characteristics,the

segments

ofyounger

and

less

educated

workers

showed

thelargest

declines.By

quality

of

employment,the

underemploymentrate

remained

around

49%,

while

the

informalemployment

rate

experienced

a

slight

reductionfrom

73.5%

to

72.7%compared

to

the

firstquarter.(average

l

ast

3

months)Jun-22Jun

2317.35.3Employed

EAP

(millions)Unemploymentrate

(%)17.54.21:

Until

December

2022,information

from

theENAHO

isused;

for

the

firstand

s

ec

ond

quarters

of

2023,

the

EPEN

isused.Source:

INEI

(ENAHO

EPEN).Prepared

by:

BBVA

ResearchBBVA

Research

/

Peru

Economic

Outlook-

October,

202323The

creation

of

formal

jobs

continued

at

around

3.0%

year-on-year,

while

theaverage

wage

(adjusted

for

inflation)

continued

to

fallMONTHLY

INCOME

FROM

FORMAL

EMPLOYMENT,NAT

IONAL

FORMAL

EMPLOYMENTADJUST

ED

FORINFLAT

ION

1(SEASONALLY

ADJUSTED,

SOLES

AT

JUL-23)(Y/Y

%

CHG.)In

July,

formal

public

sector

jobscontracted

by

0.2%;

private

sector

jobsgrew

by

4.0%.Unusually

highutility

paymentsIncrease

of151,000

jobsAvg.

2016-2019:

2.7%(MILLIONS

OF

FORMAL

JOBS)Jul-195.2Jul-204.9Jul-215.2Jul-225.5Jul-235.71:

In

July

2023,the

average

income

ofa

formal

job

was

PEN

4,385

(PEN

2,849

in

June

2023),

which

includes

bonuses.

For

the

graph,the

original

income

series

has

been

seasonally

adjusted

to

smooth

the

peaks

inMarch

(prof

itpayments),

J

uly

and

December

(bonus

payments).

The

series

has

been

normalized

so

that

the

latest

data

(July

2023)matches

the

nominal

m

onthly

income

for

the

month.Source:

SUNAT

(Spreadsheets)

and

BCRP.

Prepared

by:

BBVA

Research.03Global

economy

forecastsBBVA

Research

/

Peru

Economic

Outlook-

October,

202325Global

growth

is

likely

to

soft

land

w

hile

monetary

policy

will

remainrestrictive

for

a

longer

than

usual

period

to

help

inflation

ease

towards

targetsBBVA

RESEARCH

BASELINE

SCENARIO:

GDP

GROWTH,

INFLAT

ION

AND

POLICY

INTEREST

RAT

ES

(*)(GDP

GROWTH:

%,

INFLATION:YOY

%,

EOP,

POLICY

INTEREST

RATES:

%,

EOP)Monetary

tightening

cycleGlobal

growth:

from

3.5%

in2022

to

2.9%

(+0.0pp)

in

2023and

3.0%

(+0.1pp)

in

2024Inflation

will

remain

high,

butwilltrend

down

as

demand

weakensand

given

no

extra

supply

shocksis

likely

over

in

the

US

andthe

EZ,

butrate

cuts

are

notaround

the

corner(*)

In

the

case

of

theEurozone,interest

rates

on

refinancing

operations.Source:

BBVA

Research

based

on

Bloomberg

data.BBVA

Research

/

Peru

Economic

Outlook-

October,

202326US:

growth

resilience

signs

make

a

recession

unlikely

ahead,

postponing

theprospects

for

the

beginning

of

the

easing

cycle

to

mid

-2024US:

GDP

GROWT

H(%)GDP

forecasts

revised

up

on

robust

domesticdemand:

solid

consumption

and

resilientinvestment

(boosted

by

housing

marketrecovery

as

well

as

IRA

and

CHIPS

acts).Inflation

expected

to

reach

2.9%

in

Dec/23

and2.4%

in

Dec/24;

upside

risks

are

still

relevant.Fed:

inflation

improvement

willprevent

extrarate

rises

(but

ahike

is

still

possible

in4Q23);an

easing

cycle

from

Jun/24

islikely

totakerates

to

4.75%

inDec/24.Risks:arecession

or

financial

stress

on

tightmonetary

conditions

and

persistent

inflation,presidential

elections.(f

):f

orecast.Source:

BBVA

ResearchBBVA

Research

/

Peru

Economic

Outlook-

October,

202327China:

prospects

deteriorated

significantly

and

risks

increased

givenincreasing

structural

challenges,

but

a

gradual

growth

slowdown

is

still

likelyCHINA:

GDP

GROWT

H(%)Generalized

deceleration

on

weak

confidence,real

estate

crunch,

2021

“

regulatory

storms”

andglobal

slowdown.Still,

the

most

likely

scenario

isthat

furthertargeted

monetary,

fiscal

and

regulatorymeasures

sustain

growth

and

drive

inflation

up.Although

a

soft-landing

is

still

expected,

GDPforecasts

have

been

revised

down

on

incomingdata

and

a

costly

(but

controlled)

addressing

ofreal

estate

imbalances.Structural

challenges:

balance-sheet

recessionand

deflation,

US-China

confrontation,

middle-income

trap,

unfavorable

demographics,

etc.(f

):f

orecast.Source:

BBVA

ResearchBBVA

Research

/

Peru

Economic

Outlook-

October,

202328Eurozone:

persistent

inflation,

despite

w

eaker

GDP

growth,

is

likely

to

forcethe

ECB

to

main

tain

policy

rates

at

restrictive

levels

for

longEUROZONE:

GDP

GROWT

H(%)Growth

revised

down

on

incoming

data

amid

adeceleration

of

China,

whose

effects

will

bemostly

offset

by

higher

USgrowth.Fiscal

policy

is

stillsupportive,

but

will

likelybecome

more

targeted

and

less

expansionaryonwards.Average

inflation

forecasts

revised

up:

5.7%

in2023,

3.0%

in2024

on

service

stickiness,rebound

in

oilprices.ECB:

rates

are

likely

to

remainat

current

levelsuntil

Dec/24;

increasing

focus

on

liquidityreduction

measures.Risks:higher

energy

prices,

more

persistentinflation,

stagflation,

China’s

deceleration.(f

):f

orecast.Source:

BBVA

ResearchBBVA

Research

/

Peru

Economic

Outlook-

October,

202329Risks:

the

soft-landing

scenario

could

be

potentially

derailed

by

problems

inChina

and

the

effects

of

the

still

high

in

flation

and

interest

ratesM

AIN

RISKSM

AIN

UNCERTAINTIESRecession

and

financial

stress

on

tight

monetaryconditions?

mainly

under

more

persistent

inflation

(onlabortightness,

second-round

effects,

higher

energyprices,

etc.)?

Geopolitical

and

political

tensions?

US-China

rivalry

and

deglobalization?

Climate

change

and

energy

transition?

Social

tensions

and

populismAhard-landing

in

China?

due

to

real

estate

problems,

low

confidence,US-China

confrontation,

deflation,

etc.?

potential

financial

spillovers04Peru

economy

forecasts4.1Economic

activityBBVA

Research

/

Peru

Economic

Outlook-

October,

202331Base

scenario

for

the

second

half

of

2023

and

for

2024:

key

considerationsForecast

deterioratesForecast

improvesForecast

remains

the

same1.

Negative

surprise

in

Q2New

GDP

contraction

in

the

second

quarter(0.5%):

adverse

weather

conditions

affected3.

Public

expenditure

related

to

El

Ni?oIn

2023:

public

expenditure

for

prevention

effortsequivalent

to

0.3

pp

of

GDP

has

been5.

Relatively

stablepolitical

contextFragile

state

of

calm

in

thepolitical