The paralysis of economic activity decreed between March and July to combat the pandemic has weighed down the data for the third quarter in Peru. The National Institute of Statistics and Informatics (INEI) has reported for this period a fall in the Gross Domestic Product (GDP) of 9.4%, a collapse that, however, marks a recovery compared to 30% in the second quarter, when the South American country suffered the worst collapse ever recorded.
Peru has maintained a curfew since March, the restaurant and hotel sector has not recovered and bars, gyms and discos continue to not open to avoid the spread of the new coronavirus. The sectors hardest hit by unemployment and the economic crisis caused by the pandemic continue to be accommodation and restaurants -which fell 61.4% in this period- and transport, storage, mail and messaging, which fell 28%, according to the report. of INEI released this Friday.
“This lower drop is due to the fact that a series of economic activities returned with the previous government. I would hope that in the following quarter, due to the end of the year holidays, it will be even less, but the concern is what will happen in the first quarter of 2021 due to a possible second wave and consequent new sanitary restrictions ”, comments to EL PAÍS economist Giovanna Aguilar, senior lecturer at the Catholic University of Peru.
“Everything will depend on how the transitional government faces the uncertainty of the health issue and quality fiscal spending, because there are jobs destroyed. We have also seen that exports have fallen due to lower external demand; then, faced with the decline in employment, the creation of new jobs has to come from the public side. The new team from the Ministry of Economy has to generate quality fiscal spending in sectors where there is a multiplier effect, such as the construction of public works ”, adds the professor.
“He is the one who knows the most about fiscal spending,” Aguilar describes the new Minister of Economy and Finance, Waldo Mendoza, who took office on Wednesday night as part of the cabinet of the transitional president, Francisco Sagasti.
The INEI also reported that in the third quarter, consumer spending by families fell by 9.3%. “Due to the pandemic, those who would be able to spend on traveling or going to a restaurant do not know what could happen, there is uncertainty and expectations have lowered. The Government could inject fiscal spending, but it is also necessary, to improve expectations, that health policy gives confidence: for example, that the diagnostic tests for covid-19 are done well, that the use of masks or other measurements. In other words, that public health policies are convincing ”, said the economist.
Aguilar maintains that although there are still no figures on the increase in poverty in the South American country as a result of the pandemic, it has not only grown in rural areas, but especially in urban areas. “It certainly must have increased,” he notes.
Until before the pandemic, 72% of the workforce in Peru was informal and the figure has not yet been updated. On the other hand, when the strict mandatory confinement ended at the end of June, six million people had lost their formal jobs, according to official figures. This week, the INEI reported that in the third quarter, almost three million citizens were left without work, a 17.2% drop compared to the same period of the previous year.