Peru's Economy Slows as Copper Output Plummets
Oliver ScottPeru's economy unexpectedly slowed to 1.5% growth in November, missing forecasts as copper output sharply declined.
Peru's economy expanded just 1.5% in November, a figure that fell far short of the 2.8% median forecast from economists. This unexpected slowdown, driven by a sharp drop in copper production, marks a significant setback for one of Latin America's standout economies.
A Closer Look at November's Numbers
The 1.5% year-over-year growth was a stark miss, aligning only with the single most pessimistic market forecast.
According to data from Peru's national statistics institute, INEI, the economy contracted on a monthly basis, shrinking by 0.44% compared to October.
Copper and Fishing Sectors Drag Down Performance
The primary driver behind the slowdown was a 12% annual drop in copper production. While Peru's energy and mines ministry has not yet released detailed figures identifying which companies were affected, the impact on the national economy was clear.
Adding to the pressure, the fishing sector also contracted by 17.9% year-over-year, though the institute noted that fishing seasons can vary significantly from one year to the next.
Broader Economic Context and Outlook
This weak performance contrasts with Peru's recent history as a regional economic leader, which has consistently posted faster growth and lower inflation than many of its peers.
Before the release of the November data, the country's finance ministry had projected that the economy would grow by approximately 3.5% for the full year, a target now under pressure.
Conflicting Signals from Labor and Monetary Policy
Despite the slowdown in growth, other parts of the economy showed strength. In a separate report, INEI announced that the unemployment rate in Lima dropped to a record-low 5% in December, beating the median forecast of 5.9%.
Meanwhile, Peru's central bank has held its key interest rate steady at 4.25%. This decision comes as the nation's currency approaches a six-year high and inflation remains below the central bank's target.
