Delegates to the annual IMF and World Bank Meetings are in Lima this October. The choice of Peru as host nation – the first in Latin America since Brazil (Rio de Janeiro) in 1967 – was intended to highlight the economy’s strong, long-term GDP growth, which has averaged around 5% over the last 10 years.
However, the slowdown in China and the related decline in commodity prices have hit Peru just as hard as other Latin American exporting nations. This year GDP growth is expected to be between 2% and 3%, after 2.4% in 2014, although with a little better predicted for 2016, as long as political uncertainty in the run-up to April presidential elections doesn’t have a negative impact on investment.
But while the meetings may not be showcasing Peru’s new era of rapid and sustainable economic growth, nor will delegates in Lima witness a return to the old times when the region interspersed growth with recessions – and occasionally a full-blown crisis.
Peru in 2015 is facing headwinds – not just from China and commodity prices but also inflation and other issues caused by an appreciating dollar – as well as a predicted El Nino event that, in the past, has created serious economic dislocation through severe weather – not to mention that presidential election.
