Goldman Sachs: "Peru doesn´t need to panic about economic deceleration"

The high rates of 5% or 6% are not possible these days. If this is not understood and government tries to over stimulate the economy through fiscal or monetary policy, macroeconomic imbalances could be created, said Alberto Ramos, head of Latin America Economic Research, Global Investment Research, Goldman Sachs.

Por: Laura Vásquez

In an interview with gestion.pe, Alberto Ramos, Head of Latin America Economic Research, Global Investment Research, Goldman Sachs, said Peru as other Latin American countries is facing a period of macroeconomic adjustment. In that context, he said it is important not to try to over stimulate the economy. Growth will be more moderate but better opportunities will arrive.

How do you see Peru’s outlook in the medium or long term?
Peru has done the right thing to normalize its monetary policy so that inflation stays under control. Peru and other Latin American countries show a very similar macroeconomic picture. They are small open economies and large commodity exporters, therefore they are going through a period of macroeconomic adjustment.

And in that context, is it possible for Peru to attract more investments?
We are going through a period of transition, we went through a decade of very high commodity prices and very cheap independent global liquidity and now the external environment is swichting to somehting that is a little bit less friendly than what used to be.

So, it’s only natural that you see these economies decelerating, that you see exchange rates appreciating, it’s just part of that macroeconomic adjustment policy. We don’t need to panic about decelaration. We just need to stick with a leyenda of a business friendly investment environment.

Will we be able to grow at higher rates?
What is important is to avoid the possible mistake of trying to over stimulate the economy. The high rates that we saw in the past of 5% or 6% are not possible these days, but if you don’t recognize that and you try to over stimulate the economy through fiscal policy or monetary policy in order to recover, you’re going to create macroeconomic imbalances.

It’s important to recognize reality as what it is. It’s imposible, in this global environment, to grow at those rates so you have to accept that growth will be more moderate and better opportunities will arrive.

Which do you think are the main risks for Peru?
The risk would be if you don’t recognize that this slowdown is something different and come to the temptation of experimenting with something else, or go into a populist way or overuse monetary policy or fiscal policy. I don’t see any large imminent risks in the horizon, I don’t see any major macroeconomic imbalances that require immediate correction like I see in other economies.

Which is the Outlook for Latin America in the years to come?
The outlook for the Latin American region in the short term and medium term is relatively fair. In the region, Peru belongs to the group of countries, that is pursuing more conventional policies, together with Colombia, Mexico, Chile and they are doing relatively well.