Peruvian Economy Expected to Grow by 4% in January Amidst Recovery

Peru’s economy is projected to grow 4% in January, recovering from a 0.4% recession in 2023. Key sectors may face uncertainty due to U.S. tariffs, but overall impact is limited. The central bank maintains the interest rate at 4.75%, reflecting a cautious approach to economic stability.

The Central Bank of Peru anticipates that the country’s economy expanded by approximately 4% in January, a prediction made by Chief Economist Adrian Armas. This projection aligns with forecasts from analysts, just prior to the government’s release of the official monthly statistics. Following a recession that resulted in a 0.4% contraction in 2023, Peru’s economy rebounded with a growth of 3.3% last year, and the government aims for a 4% growth rate by the end of 2025. Such growth would position Peru as one of the fastest-growing economies in the region.

In addressing concerns over U.S. tariffs, Armas stated that the anticipated impact on Peru’s economy is likely to be minimal, although the manufacturing and agricultural sectors may experience some uncertainty. Furthermore, regarding Peru’s vital mining industry, Armas indicated that any potential tariffs would not significantly hinder the export of the sought-after red metal, as exporters can redirect their sales to alternative markets. However, he acknowledged that ongoing uncertainties surrounding U.S. tariff policies contribute to a volatile global economic environment.

During the call, Armas also communicated that the central bank has maintained its key interest rate at 4.75% since the beginning of the year, deeming this rate as “neutral territory” while inflation remains within the desired target range. This stability reflects the Bank’s cautious assessment of economic conditions amid fluctuating inflation indicators.

In summary, Peru’s economy is expected to show a robust growth of 4% in January, as per the central bank’s projections amidst a broader recovery following last year’s recession. While potential U.S. tariffs pose some risk, the overall impact on Peru’s economy is assessed to be limited, particularly in core sectors such as mining. The continuation of the interest rate at 4.75% further indicates the bank’s commitment to maintaining stability in economic conditions as inflation levels are monitored closely.

Original Source: money.usnews.com