Latin America: Destination Peru

Rob Dwyer
Published on:

Lima will host the 2015 World Bank-IMF meetings. But will the country’s moment in the sun be blighted by the dark clouds of an economic slowdown?

"We have too many companies that owe their debt in dollars – that is a concern. Most of the household debt is now in domestic currency, but many corporates saw the historical low rates of dollars and they thought that markets sometimes just go in one direction"

Julio Velarde,
Central Bank of Peru

The World Bank-IMF meetings will be held in Lima in 2015. The annual event will make its first return to Latin America after an absence of 48 years. The last time, in 1967, Rio de Janeiro was chosen to showcase the potential of the Brazilian economy, which burst into life eventually, rather later than expected and, currently, is flickering somewhat, flirting with a recession in the first half of this year. Now it is Peru’s turn to play standard-bearer for a region that has always been blessed with commodities, but too often blighted by economic mismanagement, corruption and missed opportunities.

This time round, the IMF may have selected its Latin American host just as the country peaks: after years of more than 6% growth, driven by strong commodity exports, Peru’s economy is slowing. After growing by 4.8% in the first quarter of this year, real GDP growth slowed to 2.0% in April and 1.8% in May. Estimates for June were also weak, leading to the prospect of possible sub-2.0% growth in Peru for the first time since 2009. Exports have fallen 11.9% in the first five months of the year as prices for copper – Peru’s largest export – have fallen by nearly 5% this year after a 7.2% drop in 2013.