El Niño Costero affects agricultural producers, commerce and banking in Peru

The greatest impact of the climate phenomenon on the financial system has taken place in the squares of Piura, Chiclayo, Trujillo and Chimbote, due to the fact that people have suffered material damages both in their homes and in their businesses, which generates less commercial activity and banking

The passage of El Niño Costero through the north and the Peruvian coast has left a trail of death and destruction. The impact of this climatic phenomenon has affected not only the infrastructure of roads or communications, but has also wiped out large areas of farmland - which corresponds to most of Peru's export production - and hundreds of small and medium entrepreneurial businesses that will result in high unemployment in the short and medium term. Not a minor issue if one considers that between 77% and 82% of workers in the most affected places do not have support in the face of unemployment because they are informal.

COMMERCE AND AGRO

In the northern part of Peru, besides being the most important export agricultural crops, the 12% of the retail industry and the food and equipment supply is concentrated, which has felt the impact of road cutting and the isolation of the consuming population, falling its sales in an 25% and is reaching the limits of stock of merchandise due to the impossibility of replacement.

According to the estimates of the leaders of the Chamber of Commerce and Production of Piura, retail sales have decreased around 40% since the rains began. "The situation for the merchants has been complicated, because not only they will have to confront a fall in the sales but the possible impact in the profitability before the increase of the cost in the maintenance of its premises", Comments Pedro Sevilla, manager of the Centenario Shopping Centers division.

The companies that supply inputs to the producers of the area have not been able to arrive with their shipments of products due to the situation of total isolation of the agricultural areas of the north, mainly Piura, Trujillo and La Libertad.

However, César Peñaranda, executive director of the Institute of Economics and Business Development of the Chamber of Commerce of Lima, believes that there may be a backlash due to the same situation of catastrophe and that the country-level trade sector can grow an 1 % in March, since in less affected places, consumers have begun to buy excessively certain products, filling their pantries, as a result of the El Niño Costero phenomenon.

THE BENCH

The insurance companies Rimac Seguros and Pacifico Seguros already have some reports of damages, and they claim that both have registered losses due to rains and huaicos for about USD 30 million.

According to Gonzalo Camargo, deputy general manager of Banco BBVA, financial operations were affected by interruptions in communications and partial drops in the network of telephone and data operators. The greatest impact of the climate phenomenon on the financial system has taken place in the squares of Piura, Chiclayo, Trujillo and Chimbote, due to the fact that people have suffered material damages both in their homes and in their businesses, which generates less commercial activity and banking, and in the medium term, difficulties in complying with bank commitments acquired.

The financial institutions are preparing plans to repair damages and above all to offer their clients the necessary guarantees for the fulfillment of banking commitments and financial aid packages in the future reconstruction of their businesses. Some have published that they will not charge interest for late payment in the credit cards of the users of the affected areas and will initiate a collection of funds to support the victims.

Source: Blueberries Consulting - Blueberries Chile

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