Peru economy shrinks for two straight quarters, minister denies recession

(Reuters) – Peru’s finance minister said on Tuesday that preliminary data showed the country’s economy shrank in June, marking two consecutive quarters of contraction, which is a common definition for a recession.

Finance Minister Alex Contreras told reporters he expects economic growth to return in July after preliminary data showed that the economy shrank by about 1% in June.

That followed official data showing that the South American country’s economy contracted by 0.43% in the first quarter. In April, it expanded by 0.31%, but shrank by 1.43% in May.

Despite the data, Contreras asserted that the economy is not in recession while heaping blame on “obsessed” analysts who root against the government for any suggestion to the contrary.

“The economy isn’t in a recession and it hasn’t entered into a recession,” said Contreras, adding that economic recessions typically involve “prolonged periods” of downturn, though he did not provide a specific definition.

“The main point is that our economy has suffered two high-impact shocks,” he noted, citing adverse weather that has hurt farming and fishing linked to El Nino weather phenomenon, as well as social conflicts tied to political protests that kicked off late last year.

The protests, which affected the country’s key mining sector, followed the ouster and jailing of former President Pedro Castillo last December.

“There’s a group of economists who are obsessed with this subject,” added Contreras, accusing them of seeking to undermine the eight-month-old government of President Dina Boluarte.

The minister also pointed to billions of dollars worth of “ambitious” private sector investments he sees coming online during the third quarter, in addition to significant government spending plans.

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