Peru’s economy contracted significantly in May after two months of slow growth, dashing hopes that a slow recovery was underway after the country’s worst political turmoil in decades.
The economy contracted 1.43% compared to a year ago, national statistics agency INEI said on Saturday, the most since the depths of the pandemic in early 2021. All three analysts surveyed by Bloomberg had expected the economy to grow modestly.
The poor figure illustrates the current weakness of Peru’s economy following historic unrest that left dozens dead and hurt investor confidence. While Peru’s economy grew last month, it grew less than even the most pessimistic forecast.
In the first five months of the year, Peru’s economy has contracted 0.49%, INEI said.
The economy was hurt mostly by a 70% collapse in its fishmeal industry, the largest in the world, which has been put on halt due to warmer waters triggered by the El Nino weather pattern.
The economy’s contraction will put pressure on President Dina Boluarte’s administration, whose approval ratings among chief executive officers is more than quintuple her approval ratings with the population at large. It also challenges the finance ministry, which has insisted that a recovery was already on the way and that the economy will grow 2.5% this year, a target that looks increasingly unreachable.
