LatinNews Daily - 20 September 2021

In brief: Peru raises GDP forecast for 2021

* Peru’s central bank (BCRP) has raised its growth forecast for 2021 from 10.7% to 11.9%, with BCRP president Julio Velarde predicting that the country could return to pre-coronavirus (Covid-19) levels of growth by the end of this year. Peru’s economy contracted by 11.2% in 2020 due to the effects of the coronavirus pandemic. The improved forecast is driven by the BCRP’s expectations of increased spending and investment, with private consumption now predicted to increase by 9.2% year-on-year, compared to the BCRP’s June forecast of +8.5%. The BCRP also raised its projection of fixed private investment growth from 15.5% to 24.5%, its public spending forecast from 7.0% to 9.0%, and its public investment forecast from 19.0% to 20.0%. However, the BCRP forecast a much slower rate of GDP growth in 2022, predicting that Peru’s economy will expand by 3.4% that year (down from 4.5% in the June forecast). Velarde attributed this to a “weakening of business expectations”, apparently referring to the unease that has been caused in the private sector by the election of new President Pedro Castillo.

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