Peruvian economy’s outlook very uncertain, downside risks prevail, says IMF

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People walk at Surco market in Lima

– The outlook for Peru’s economy is “very uncertain and downside risks prevail” despite a strong rebound in gross domestic product growth (GDP) last year, the International Monetary Fund (IMF) said in a report published on Monday.

The IMF said that after posting GDP growth of 13.3% in 2021, Peru’s economy is expected to expand by 3% in 2022 as external conditions tighten and the policy stimulus is withdrawn.

The main risks relate to the pandemic, a sharp tightening of global financial conditions, extended global supply chain disruptions, geopolitical tensions, and an abrupt growth slowdown in Peru’s main trading partner China, the report said.

“The economic recovery has been strong, but the outlook is confronted with downward external and domestic risks,” said the IMF.

The report added that Peru is still bearing high social and economic costs related to the pandemic.

Regarding the Peruvian central bank’s efforts to tamp down inflation the IMF said “monetary policy has responded appropriately to rising inflationary pressures, but further tightening is necessary to bring inflation under control.”

(Reporting by Carolina Pulice; Editing by Anthony Esposito and Ken Ferris)

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