Peru central bank signals possible third straight quarter of GDP contraction

LIMA (Reuters) -Peru’s economy may have shrunk for a third straight quarter from July to September, the central bank’s chief economist said on Friday, as the Andean nation struggles to claw its way out of a recession.

The world’s No. 2 producer slid into a technical recession earlier this year after two quarters of negative growth due to the adverse impacts of the El Nino weather phenomenon, lower private investment and lingering effects from earlier social conflicts.

“With the recent information, it is possible that we may have a negative growth rate in the third quarter,” the bank’s chief economist Adrian Armas said in a presentation.

The central bank in September slashed its growth forecasts for 2023 to 0.9% from the previously forecast 2.2%, a projection that now faces “downward pressure,” said Armas.

The comments came a day after the bank lowered Peru’s benchmark interest rate by 25 basis points to 7.00%, its third consecutive cut as the monetary authority eases borrowing costs in an effort to resuscitate the economy.

The economy could see a turnaround in the fourth quarter, Peru’s economy minister said on Thursday while announcing a package of stimulus measures aimed at boosting investments, particularly in the country’s critical mining sector.

The new measures are “fundamental” not just to attracting investment but also to recovering declining confidence within the business community, Armas said on Friday.

Peru’s national statistics agency is scheduled to next report official GDP data on November 15.

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