One in five Peruvians needs to reduce expenses to make ends meet

A study by Omnicom Media Group (OMG) shows a slight improvement in consumer solvency, driven by withdrawals from CTS and AFP.

Despite a slight improvement, one in five Peruvians still needs to reduce their spending to make ends meet. The situation has improved compared to the first quarter, thanks in part to withdrawals of CTS y AFPbut the outlook remains difficult for undertaking towards the end of 2024.

The study “1000 Peruvians Say” – OLA VIII, conducted by Omnicom Media Group (OMG) at the end of the first half of 2024, reveals that 37% of Peruvians can “save a little more at the end of the month.” This figure is an increase compared to 22% in March.

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The data show that the number of Peruvians who said they were “barely making ends meet” fell from 33% to 29%. Those who needed to cut back on spending to balance their accounts dropped from 28% to 19%. In addition, those who turned to their savings fell from 15% to 9%. Even the percentage of those who “could save a lot at the end of the month” rose from 2% to 6%, indicating a slight financial recovery among respondents.

Impact of CTS and AFP withdrawals

The study, which was completed in June, coincides with the period of withdrawals from CTS and AFP. According to Catalina Niño, research director at Omnicom Media Group Peru & Bolivia, almost 50% of respondents planned to withdraw these funds. Of those who did not withdraw, 38% simply did not have the funds available.

Intended use of funds

Forty percent of respondents said they would use the money to pay off debts, while only 27 percent planned to invest it in a financial institution. Twenty-eight percent were considering withdrawing the funds, but to save them rather than invest. In contrast, only 15 percent planned to use the funds to purchase goods and 9 percent to pay for services.

Outlook for the second half of the year

These patterns could lead to lower prices and greater liquidity at the beginning of the second half of 2024. Interest in starting a business before the end of the year also decreased from 53% to 47%.

Consumer expectations

Expectations for the second half of the year have declined in several areas, despite the withdrawals from CTS and AFP. The intentions to start a business, improve one’s lifestyle, invest, buy a house, resume higher education, or acquire a vehicle have decreased. The hope of changing jobs, becoming independent, visiting other countries, or getting married has also decreased. Although debts have been reduced, the space for new opportunities remains limited for the rest of 2024.