Peru’s Economic Recovery Stalls in June as Growth Comes in Below All Forecasts

(Bloomberg) -- Peru’s economic recovery suddenly stalled in June, as the economy barely grew after two months of beating expectations.

The economic activity index, a proxy for gross domestic product, rose 0.21% from a year earlier, the national statistics agency INEI reported Thursday. The result was below even the most pessimistic forecast in a Bloomberg survey of nine economists, where the median forecast was for 1.8% growth.

Compared to the previous month, the economy contracted 1.54%.

The reading will raise questions about the strength of Peru’s economy as it bounces back from a rare recession in 2023, triggered by social unrest, political turmoil and bad weather.

The economy had managed to grow at rates above 5% in April and June, boosting optimism among government officials and economists that Peru might grow above expectations in 2024. But the economy was dragged down in June by contractions in mining, construction and agriculture, INEI said.

Peruvian President Dina Boluarte said last month that the economy was expected to grow above a forecast 3.1% in 2024, although government officials have yet to give a new estimate. To meet forecasts, the economy still needs to accelerate in the second half of the year. That may be possible.

The central bank has said that its monthly surveys show that business leaders are optimistic about the economy for the first time in months. It recently lowered its benchmark interest rate to 5.5% after holding it for two months.

Prime Minister Gustavo Adrianzen suggested in a post on X that the economy might have grown almost 4% in the first half of the year, saying this was due to the “generation of trust, the stability and transparency with which are working.” But INEI said the economy had actually grown much less, 2.5%, in that period.