How much will El Niño cost Peru?
The recent floods and heavy rainfalls have caused so far, 95 deaths and leaving nearly 700,000 people homeless. In addition, it has damaged critical infrastructure in communities and cities. Experts are now saying that this devastating situation could have been prevented.
Gilberto Romero, the head of the Center for Disaster Research and Prevention, said to the Economist, “this is not a natural disaster, but a natural phenomenon that has led to disaster because of the informal way this country has developed.”
How much damage has El Niño caused? The destruction caused by El Niño is costing Peru $3.1 billion in damages which is 1.6% of Peru’s GDP reports Macroconsult. Almost three-quarters of those costs are to cover damages to houses, bridges (175) and roads (2,000 kkm) such as the central highway.
Furthermore, the GDP of Peru will slow down substantially. The Peruvian government had forecasted a growth of 4.8% for 2017, while Macroconsult lowers the projection for Peru's GDP growth in 2017 to 2.9%.
Peru’s advantage is its well-prepared budget. Peru has low debt levels and it has the second-highest level of international reserves in South America at 31.5% of GDP in 2015. Additionally, Peru is a country that attracts private investment which will boost its GDP.
What do you think about Peru’s situation?