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Economy & Business - March 2021

PERU/COLOMBIA: Cautious hopes for economic recovery

In 2020, Peru experienced one of the biggest GDP declines in Latin America, of 11.1%, as a result of the coronavirus (Covid-19) pandemic. With the second quarter hit particularly hard, with a 30.2% year-on-year contraction, this was the worst GDP result for the country since a 13.4% decline in 1989. However, both the United Nations Economic Commission for Latin America and the Caribbean (Eclac) and Peru’s own finance minister, Waldo Mendoza, are tipping Peru as the most likely country in South America to rebound rapidly, with a forecast GDP increase of 9% for 2021. Last year was also a disastrous economic year for Colombia, whose national statistics institute (Dane) reports an economic contraction of 6.8% in 2020, representing a loss of US$70bn, the worst decline in a single year in Colombia’s modern history. As with Peru, Colombia is predicted to record something of a recovery in 2021, with Finance Minister Alberto Carrasquilla forecasting in early March that GDP would grow 5% this year.

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