Peru’s Central Bank Lowers Economic Outlook for 2011, 2012

Peru’s Central Bank lowered its forecast for the country’s economic growth for this year and in 2012 as financial woes in the United States and Europe continue to bring uncertainty to the global economy.

The bank forecasts that Peru’s gross domestic product will expand by 6.3 percent this year, down from a previous outlook of 6.5 percent, business daily Gestion reported.

In the first half of this year, Peru’s GDP grew by 7.7 percent. Central Bank President Julio Velarde said he expects it will expand by 5 percent in the second half of this year.

Velarde said that in 2012 the economy should grow by 5.7 percent, compared to a previous forecast of 6.5 percent.

Peru’s economy grew by 8.8 percent in 2010. In recent months, economic activity has slowed down mainly due to concerns in the business community about the election of leftist President Ollanta Humala.

This year’s economic growth was the slowest in June, when the GDP expanded by about 5.33%.

Since Humala’s election on June 5 and his inauguration in late July, the president has looked to ease concerns among investors by saying that he will look to maintain Peru’s economic growth while improving “social inclusion.”

Investor confidence has since recovered slightly and in July, Peru’s economy grew by 6.52 percent and 7.51 percent in the first seven months of this year.

However, economists are now pointing to growing uncertainty in the global economy as a challenge for Peru.

“We consider that internal demand will continue to be the main driver of the economy, which we forecast will close 2011 with GDP growth of 6.4 percent,” said economist Pablo Nano of Scotiabank Peru.

“For next year, the main risk is a potential recession in the developed economies and their impact in the local economy,” he added.

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