Peru, one of the Latin American countries whose economy has grown the most in recent years, is currently in recession, acknowledged its Minister of Finance, Alex Contreras, after months of social conflicts and climate problems.
Although Peru’s economy has contracted in the last two quarters – which meets the technical definition of a recession – Contreras pointed out that this is an “obsolete” meaning and that recovery would soon come.
“Without a doubt this is a recession. The situation is very difficult,” Contreras admitted to a group of journalists last night.
Analysts cut growth forecasts for this year and some of them even foresee a contraction for the entire year as a whole which, if it happens, would be the first in 25 years, except for 2020 driven by the coronavirus pandemic.
In fact, according to a projection by the Bloomberg news agency, the economy would close the year with a drop of 0.1% compared to 2022.
In 2022, Peru’s Gross Domestic Product (GDP) expanded 2.68%.
The conflict during the first months of President Dina Boularte’s administration especially affected demand and domestic activity; and, subsequently, the impact of the El Niño phenomenon on agriculture hits the country.
Last August, the last month for which data is available, the economy fell 0.63% compared to the same month in 2022, according to data from the National Institute of Statistics and Informatics (INEI), compiled by the AFP news agency.
This is the fourth consecutive month of decline.
The result was worse than what analysts estimated and was due to the negative behavior of sectors such as construction, which contracted 9.57%, manufacturing (-4.11%), and agriculture (-4.05%), being partially offset by the growth of the fishing sector (49.14%) and mining and hydrocarbons (5.17%).
At the moment, the Peruvian authorities project a growth of 1.1%, after correcting downwards the 3.4% that was estimated before August.
Source: Ambito
