LIMA (Reuters) – Peru expects to raise its economic growth projection for 2021 from the current forecast of 10% as coronavirus cases fall from this year’s devastating peaks, reinvigorating 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 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 elections in April next year.
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 stick to a prior estimate for a 12% contraction in gross domestic product this year, and predicted the economy in both October and November had contracted by 5.8%, but would fall by only 3% in December.
“In the first quarter (of 2021), possibly in February or March, we could see positive figures,” Mendoza said.
Mendoza added the slow economic recovery was helping ease pressure on the fiscal deficit, which ballooned after Peru launched the region’s biggest stimulus packages to weather the coronavirus crisis.
Peru had previously predicted the massive package 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.
The Andean nation last month found international markets eager to soak up its offer of $4 billion worth of debt, but Mendoza said he didn’t see the need to issue more debt for now.
(Reporting by Marco Aquino, writing by Dave Sherwood, editing by Nick Macfie and Sam Holmes)