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LatinNews Daily - 27 October 2020

In brief: IMF predicts slow recovery of Peru’s economy

* Alejandro Werner, the director of the Western Hemisphere department at the International Monetary Fund (IMF), has said that following the economic crisis caused by the coronavirus (Covid-19) pandemic, Peru’s GDP is unlikely to return to pre-pandemic levels until the end of 2022. Speaking to national daily La República, Werner cited Peru’s relatively large proportion of “contact-intensive sectors of economic activity and employment”, such as its large informal sector, as a major reason why the country’s economy has been hit so hard by the pandemic – the 30.2% year-on-year GDP contraction in the second quarter was among the worst declines recorded anywhere in the world. However, Werner suggested that Peru’s relative fiscal stability compared to other countries in the region provides cause for optimism when it comes to economic recovery, and recommended that this recovery be sustained through increased public investment, targeted in particular towards “closing digital infrastructure gaps", "reducing formalisation costs”, and “increasing labour productivity”.

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