Harder Than Returning to the World Cup

The Peruvian Institute of Economics (IPE) estimates that, growing at 3% as projected by the Central Reserve Bank of Peru (BCRP) for the coming years, it would take Peruvians 23 years to return to the 2019 poverty levels (20%). If we slightly deviate and grow by only 2%, we would achieve this in 35 years (2059). In other words, at the current pace of the economy and the national football team, Peru might return to a World Cup before it returns to pre-pandemic poverty levels.

This grim outlook demands, now more than ever, the reactivation of private investment and, by taking advantage of favorable external conditions, the creation of quality jobs and inclusive growth. There is no more sustainable way to reduce poverty and generate well-being than through the effects of economic growth. We achieved this in the past for almost 25 years. Knowing the recipe, it’s time to apply it again.

There is no more sustainable way to reduce poverty and generate well-being than through the effects of economic growth.

However, to ignite the spark of the economy’s virtuous circle, a set of serious reforms is necessary. While Peru seems to be walking with one eye on the precipice and everything seems important, these reforms should not be overlooked:

1. A State that prioritizes what truly matters (education, health, security) through evidence-based measures, not just “well-intentioned” ones. A bad remedy can be worse than the disease. Examples include tax benefits, states of emergency, and state entrepreneurial ventures, among many others.
2. Administrative simplification across all three levels of government that promotes a favorable business climate. This does not mean lowering standards (environmental care, safety, etc.) but ensuring compliance with deadlines. In 2018, Peru ranked above 83% of jurisdictions in the Fraser Institute’s Mining Investment Attractiveness Index; by the end of 2023, it only surpassed 31%.
3. A serious political reform that ensures the 2026 elections do not represent another setback. It is challenging to convince new investors (local and foreign, small and large) to bet and invest in a country that is so unpredictable politically, without it affecting the rules of the game and business.

Finally, an important aspect is ensuring the political and budgetary independence of technical public institutions like the National Institute of Statistics and Information (INEI)^a. If we cannot trust the quality and independence in data collection, strategic decision-making will not be much different from flipping a coin.