Peru’s finance ministry says the economy is in recession, after months of denying that this was really the case.
(Bloomberg) — Peru’s finance ministry says the economy is in recession, after months of denying that this was really the case.
When output contracted in the first two quarters — meeting the technical definition of a recession — the finance ministry said this was an obsolete definition, and that a recovery was around the corner.
Since then, economic activity has continued to drop and analysts have repeatedly cut their growth forecasts for the year. Some economists are even predicting a contraction for the year as a whole, which, excluding the pandemic year of 2020, would be the first in a quarter century.
Now the formerly-optimistic finance has joined those warning of hard times.
“It is without a doubt a recession,” Finance Minister Alex Contreras told reporters in Lima on Friday. “The situation is very difficult.”
Social unrest hurt the economy in the first quarter, and now severe weather is disrupting agriculture and fishing. The recession is a particularly hard reckoning for Peru, which has been Latin America’s fastest growing major economy this century.
Read More: Peru Economy Shrinks Again, Pointing to Negative Growth in 2023
The economy will shrink 0.1% this year, according to a forecast from Bloomberg Economics.
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