Peru’s central bank cuts growth forecast despite government stimulus

Peru’s central bank cuts growth forecast despite government stimulus

LIMA (Reuters) – Peru’s central bank on Friday cut its economic growth estimates for 2022 and 2023 amid worse expectations despite a government stimulus package aimed at boosting domestic production.

The central bank now expects growth in 2022 of 3.0%, compared to 3.1% previously, and growth of 2023 of 3.0%, compared to 3.2% previously. It also forecast annual inflation to rise to 7.8% this year and 3.0% in 2023.

This comes after Finance Minister Kurt Borneo last week launched an economic package aimed at reviving the economy in times of global slowdown and low prices, which are fundamental to the country’s economy.

Borneo had said earlier in September that Peru could achieve 3.9% economic growth in 2022, rising to 4.3% in 2023, thanks to the stimulus package, although many of its measures are still awaiting congressional approval.

“There is no magic wand,” Central Bank President Giulio Velardi told a news conference, saying the bank was still studying the effects of government stimulus measures.

Villard said the bank kept its 2022 fiscal deficit forecast at 1.9% of GDP and 1.8% of GDP next year. Regarding the main mining sector in Peru, Velardi said that investment should decline by 3.7% in 2022, and in 2023 this decline should deepen to 16.2%, after the completion of Anglo American Quellaveco copper project (LON 🙂 in the south of the country. Peru is the second largest producer of copper in the world and its total mining exports are about 60% of the total exports of the South American country.

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