The Peruvian economy came to a standstill in June, with gross domestic product posting just a slight expansion.
The National Statistics Institute (INEI) said Friday that Peru’s economy expanded 0.3 percent in June versus the year-earlier period, lower than expected. That would be the slowest rate since 2009, and the clearest sign yet that Peru’s once red-hot economic activity has ground to a halt.
The INEI said the economy is being impacted by the poor performance of the natural resource sectors, paraticularly the important mining and oil and gas sectors, which contracted 5.9 percent in June compared to the same month last year.
The fishing sector fell almost 31 percent in June, due to the El Niño warm water current which has begun to push anchovy schoals further out to sea in search of cold water. The manufacturing sector, which is linked to the fishing industry due to the important production of fishmeal, contracted 8.3 percent.
The considerably slower growth is due to lower commodity prices that have dragged down key mining exports.
Peru’s economy is highly dependent on the mining sector, which accounts for 60 percent of export earnings, 15 percent of GDP and about a third of government tax revenue.
Peru’s economic growth during the past decade was the fastest in South America, due to a global commodities boom thanks to demand from China. Chinese demand for copper, zinc and other minerals has fallen off, which has hurt metal prices.
However, Peruvian economists still expect growth to come in at around a respectable 4 percent this year on expected stronger growth in the second half of the year driven by new mining output and infrastructure works.