Peru Cuts Growth to Below 3% for 2015

Peru’s Finance Ministry has cut its forecast for economic growth this year, saying it will likely come in at around 2.8% rather than the previous forecast of over 3%.

Finance Minister Alonso Segura said last last week that Peru’s economy is “gradually” recovering after slowing sharply during the past year due to lower metal prices and fewer investments.

“We think that, really, we are going to close with growth of around this figure, 2.8%, with a little bit of luck it could be 2.9%,” Segura said, according to business daily Gestion.

The ministry’s forecast for this year is still above projections from international organizations and many private-sector economists. In October, the International Monetary Fund said in a report that Peru’s economy would likely grow 2.4% in 2015, which would be the same as in 2014. Next year, the IMF forecasts growth of about 3.3%.

Driving the recovery in Peru’s economic growth next year is an expected boost in copper production thanks to the start of new mines and expansion projects. Copper output in Peru, the world’s third biggest producer of the metal, will likely double by 2017 with the start of the Las Bambas mine and the Cerro Verde expansion. Those projects were launched during the commodities boom.

Scotiabank Peru said Thursday that it sees growth of 3.5% in 2016, but cautioned that the country needs to find ways to diversify the economy.

“While this figure represents an improvement over 2014 and 2015, it is based almost solely on one exceptional factor: higher copper production,” Scotiabank said. “The challenge continues to be how to stimulate non-mining growth… in the economy.”

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