Lima 2014 Blog: Panel – Economic Overview of Peru and the Region and Foreign Affairs Viceminister Claudio de la Puente

By
Luisa Leme

Regional economic experts discussed how investing in sustainability could affect domestic and regional economic growth. 

Speakers:

  • Mauro Leos, Vice President and Senior Credit Officer, Moody’s Investors Service (View his presentation)
  • Munir Jalil, Director/Chief Economist, Andean Region, Citi Research
  • Luis Salazar, President, Sociedad Nacional de Industrias (View his presentation)
  • César Peñaranda, Executive Director, Institute for the Economy and Business Development, Lima Chamber of Commerce (moderator)

Panelists discussed Peru's development challenges while fighting climate change and facing a period of slower growth. Despite Peru’s reputation among investors and its record of the second highest economic growth in the region—6 percent since 2011—participants pointed out the need for the country to strengthen institutions and diversify the economy while investing in human capital, innovation, and cleaner energy.

Moody's Investors Service Mauro Leos explained how Peru gained an A rating by the sovereign ratings agency this year. Until 2014, only Chile had this rating in Latin America, but Peru's growth and fiscal balance helped boost investor confidence. Leos explained that even among its new grade-A peers like Malaysia and Poland, Peru presents a better fiscal balance: debt represents only around 20 percent of the country’s GDP. On the other hand, Leos highlighted the need for the country to strengthen its institutions, noting that its regulatory framework is the only aspect of Moody’s ratings that puts Peru closer to middle income countries higher in the ranking. Leos identified several examples of challenges, including corruption, rule of law, and government efficiency.

Munir Jalil, chief economist of the Andean region for Citi Research, explored Peru’s economic outlook and highlighted the country’s GDP per capita as an indicator of development. While economists focus on the need for a country to grow, climate change damage should be minimized at the same time, he noted. He said that it is not feasible for the region to center economies completely on natural resources. Jalil pointed out that 55 percent of Peru’s exports are in the mining industry, and mentioned that informality in the sector is a challenge.

Sociedad Nacional de Industrias President Luis Salazar gave a more optimistic perspective, explaining that it is possible to address climate change while growing the economy. He outlined issues such as regulations and government efficiency as important factors for the country’s growth.  He noted that small structural policies in specific sectors could increase growth.

The Lima Chamber of Commerce's César Peñaranda gave the panel three key points to take into account when considering Peru’s future growth: macroeconomic stability, investments, and productivity. He said that human capital and innovation would be essential for Peru to diversify its economy. 

Watch the video: