By Marco Aquino
LIMA, Dec 7 – Peru expects to raise its projection for 10% growth in 2021 as cases of coronavirus fall off from their devastating peak this year, reinvigorating the economy of the world’s No. 2 copper miner, Economy Minister Waldo Mendoza told Reuters.
Peru was a Latin American success story for almost three decades before the pandemic hit the mining-driven economy hard, pushing up poverty levels and driving it towards its biggest annual contraction in a century.
A recent political crisis, which saw three presidents take office in less than a month, has also piled on uncertainty ahead of April 11 elections.
Mendoza said in an interview that increasingly optimistic economic indicators, falling cases of coronavirus and the promise of a vaccine were nonetheless aligning to boost forecasts for growth in 2021.
“It could be a little bit bigger (than anticipated),” Mendoza said. “These are factors that we had not contemplated in previous predictions.”
Mendoza said the government of interim President Francisco Sagasti would still stick to a prior estimate for a 12% contraction in gross domestic product this year, but said he expected a return to growth by early 2021.
“In the first quarter, possibly in February or March, we could see positive figures,” Mendoza said.
The economy minister also told Reuters that the slowly recovering economy was helping ease pressure on the fiscal deficit.
The government of former President Martin Vizcarra earlier this year launched one of the region’s biggest economic packages to weather the coronavirus crisis, with a price tag of 20% of Peru’s pre-pandemic gross domestic product.
Peru had previously predicted the massive stimulus plan would leave the fiscal deficit at 10% of GDP for 2020, but Mendoza said a brightening economic performance would likely leave it at 8.8% of GDP. (Reporting by Marco Aquino, writing by Dave Sherwood, editing by Nick Macfie)