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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

April 10, 2023

What Factors Are Weighing Down Peru’s Economy?

Peru’s economy in January experienced its first contraction in nearly two years. Lima is pictured. // File Photo: Luisf ramirez12 via Creative Commons.

Q

  • Peru’s economy shrank by 1.12 percent year-on-year in January, the first contraction in 22 months, according to official data released on March 15. In addition to the country’s GDP, various sectors including mining, retail, transportation, construction and telecommunications shrank in January. What is at the root of Peru’s slowed economic activity, and what does it need to recover? To what extent have social conflicts affected the country’s economic outlook?

A

Alfredo Thorne, partner at Global Source and former Peruvian finance minister: “The economy has lost momentum since last July. This was indicated by the quarter-on-quarter seasonal adjustment at annual rates comparison (q/q, saar). On this comparison, real GDP growth averaged 0.3 percent in the second half of last year, following 3.3 percent growth in last year’s first half. The economy had been by shocked by the lower global growth, mainly in China, but also by less private expenditure, resulting from the brinkmanship between then-President Castillo and Congress. In January, the economy fell 1.1 percent year-on-year, and the central bank forecasts that GDP will contract 0.7 percent year-on-year in this year’s first quarter. This forecast translates into a 7.5 percent q/q, saar contraction, the sharpest since the first quarter of 2020 during the pandemic recession. The already weak economy was hit by the…”

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The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe, click here. For terms and conditions, click here. For more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.
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