Second-half economic recovery will be muted in Peru

Significance

Peru is already in technical recession, reflecting both adverse domestic and international conditions. Private investment, including in the all-important mining sector, has suffered. Inflation now appears to be trending downward, while the central bank has hitherto maintained its restrictive monetary stance. The fiscal situation is deteriorating, with the budget deficit now forecast to reach 2.4% of GDP.

Impacts

• Climatic factors will be a crucial variable in determining growth over the next six months.
• Job creation and employment will remain sluggish.
• Investment in mining will grow once world prices pick up.
• Further conflicts over mining projects are likely to arise.