Peru’s central bank expects economy to grow 3.4% in 2022 By Reuters

Peru's central bank expects economy to grow 3.4% in 2022
© Reuters. FILE PHOTO: A worker walks pasts the logo of the Central Reserve Bank of Peru (BCRP) inside its headquarters building in Lima, Peru June 16, 2017. REUTERS/Mariana Bazo/File Photo

By Marco Aquino

LIMA (Reuters) -Peru’s central bank said on Friday that it maintains its expectations that the country’s economy will grow 3.4% in 2022, while it revised its guidance for 2021, saying the economy will grow by 13.2% rather than a previous estimate of 11.9%.

Central bank president Julio Velarde added in a press conference that he expects Peru’s fiscal deficit to fall to 3.1% of gross domestic product in 2021 and 2.8% in 2022.

Peru’s tax revenue has increased significantly in 2021 over pre-pandemic levels because of the high price of minerals, which has helped narrow the fiscal deficit. Peru is the world’s No. 2 producer.

But the mining sector is also undergoing turmoil, with one of Peru’s largest copper mines, MMG Ltd’s Las Bambas, set to suspend production on Saturday because of a road blockade from a local community over jobs and economic contributions.

Las Bambas, Velarde said, represents 1.2% of Peru’s GDP.

“We are considering the Las Bambas suspension in this year’s estimates, but we are also assuming that this issue will in some way be resolved next year and for Las Bambas to continue producing,” he said.

Velarded added that the bank expects 2022 inflation to fall to 2.9%, within the upper limit of Peru’s target inflation band of between 1% and 3%.

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