Peru’s GDP dropped in June, sending the country into recession and raising expectations for an interest rate cut in the near future.
Peru’s economy shrank by 0.56% year on year, according to the national statistics agency “INEI”.
Peru’s GDP has now shrunk for two consecutive quarters, indicating a technical recession, according to experts. All of Latin America’s major inflation-targeting economies are expected to loosen monetary policy as the region’s growth and inflation slow.
Chile and Brazil have already begun to reduce interest rates, and Colombia is expected to follow in the coming months.
“Peru’s central bank is likely to loosen policy between September and December,” according to Felipe Hernandez, who covers Latin America for Bloomberg Economics.
Peru’s economy has been battered by political uncertainty since 2016, and the El Nino weather pattern has added to the burden this year.
The economy has been harmed by the continuous closure of its vital fishmeal sector, which has been unable to operate due to warmer-than-normal Pacific Ocean seas.
