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The Export Association (ADEX) of Peru and the Dominican Republic association of exporters signed an inter-institutional cooperation agreement that aims to develop links and promote trade and economic relations between the two countries. Separately, the Dominican republic’s consumer prices rose by 7.24% YoY in January after increasing by 7.83% in December.
Peru unexpectedly halted its steepest-ever series of interest rate hikes as violent unrest paralyzed the economy and dented the growth outlook. The bank held its benchmark interest rate at 7.75%. Policymakers reiterated that the annual inflation would begin declining in March and return to the target range in Q4 2023. In a report published on Thursday, the IMF expects Peru’s economy to grow by 2.4% this year, down from 2.7% in 2022.
Peruvian finance minister Alex Contreras will travel to the US to meet with investment banks and assets management representatives as the government prepares to announce its economic measures next week. His travel comes amid an ongoing political crisis costing the country an estimated USD 60-100 mln daily. Meanwhile, officials declared a sixty-day state of emergency in seven regions amid protests demanding president Boluarte’s resignation.
Moody’s lowered Peru’s outlook to negative from stable, and affirmed the country’s rating at Baa1, citing the mass protests that have roiled the nation over the last eight weeks, threatening to weaken the strength of Peru’s institutions and policy effectiveness over time. Meanwhile, Peru’s inflation rate rose to 8.66% YoY in January from 8.46% in the prior month.
Peru’s congress said on Twitter that it will resume its session on early elections today after it previously indicated that it would suspend the session to allow political parties to meet separately about potential dates for a vote this year. According to Peru’s agricultural association, eight weeks of violence has cost the country about USD 300 mln in farm exports.
Peru’s political turmoil, sparked by Congress’s decision on Saturday not to bring forward presidential elections, has claimed its first victim in Lima following the death of a demonstrator in the city. Meanwhile, an upsurge in violence at the protests threatens to reduce copper output, with about 30% of production at risk at a time of low global stocks and high prices.
An impeachment motion against Peruvian president Dina Boluarte was submitted by a group of leftist lawmakers arguing ‘moral incapacity’ due to her handling of the political crisis. Earlier, Peru’s congress extended its deadline to set a date for fresh elections. The new deadline is February 10th to give the legislature more time to review changes in the electoral timeline and rules.
The focus of Peru’s violent unrest shifted back to the impoverished rural south after mass demonstrations in Lima last week failed to unseat Baluarte’s fragile government. Dozens of highways near the southern border with Bolivia were blocked on Monday. Meanwhile, the Peruvian sol resumed its decline on Monday, falling by more than 0.34% to 3.873 per USD, the lowest since December. UBS noted that social unrest would likely remain elevated in the near term, posing risks to economic activity, fiscal accounts, and political outlook. Also, the government closed several touristic locations, including Machu Pichu and Inca Trail sites, due to rising protests.
Peruvian police in riot gear fired tear gas outside congress as protesters flocked to downtown Lima to try to topple president Baluarte’s fragile government. The public office confirmed 53 deaths related to the unrest. Meanwhile, Boluarte said her government remains firm, despite the protests.
Peruvian farmers and other protesters are heading to Lima to demand the resignation of president Dina Boluarte after weeks of demonstrations in deprived rural areas failed to displace her. The demonstrators have grown increasingly enraged as the death toll rose. Besides Boluarte’s resignation, protesters want new elections. As of Wednesday, around a 100 highways were blocked by demonstrations. The blockades disrupted the transportation of copper to several big mines.
Peru’s monthly economy expanded by 1.68% YoY in November, slowing slightly from a 2.01% rise in October, driven by a slowdown in the manufacturing and construction sectors. However, agriculture expanded by more than 1.3%, while the mining sector showed signs of improvement, growing by 5.06% in the same period. Separately, Guatemala’s trade deficit widened to USD 1.462 bln in November, up from a revised USD 1.436 bln in the previous month.
Peru declared a state of emergency in the capital Lima and three other regions following anti-government protests that have left more than forty dead. The state of emergency is in force for thirty days and will allow the army to take steps to maintain order.
Peru’s central bank raised its reference interest rate by 25 bps to 7.75% to tackle stubbornly high inflation. The country’s annual inflation stood at 8.46% in December, mainly driven by rising food prices, remaining well above the upper limit of the bank’s target range. The bank expects inflation to cooldown to 3% by the end of this year.
At least seventeen people died in Peru in the Andean city of Juliaca on Monday during clashes with law enforcement. The death toll is the highest in a single day since president Dina Boluarte took office on December 7th. Officials said about 9,000 protesters tried to take control of the city’s airport, which they say remains closed and under government control.
Peru’s economy expanded by 2.01% YoY in October, the sharpest increase since June and accelerating from the 1.77% growth registered in the previous month. However, the country’s manufacturing sector contracted by 0.63%. Year-to-date, the Peruvian economy expanded by 2.81%.
Peru’s new government declared a 30-day state of emergency in response to nationwide violent protests since Pedro Castillo was ousted as president last week. Prosecutors requested an 18-month detention for Castillo on charges of rebellion.
Mexican president Andres Obrador said relations with Peru have been paused amid the country’s political turmoil. Obrador declined to recognize Dina Boluarte as Peru’s new president. Meanwhile, Argentina, Colombia, and Bolivia issued a joint statement calling on Peru to respect Castillo’s rights, who they refer to as the country’s president even after he was ousted by congress.
S&P lowered Peru’s outlook to negative from stable while it affirmed the country’s rating at BBB. The agency stated that the way Peru’s recent change in power occurred reflects heightened political deadlock and creates uncertainty about the country’s institutional stability and its capacity to sustain continuity in supporting economic growth. Meanwhile, the leftist governments of Mexico, Argentina, and Colombia called for the protection of Pedro Castillo, the Peruvian leader impeached by congress last week for attempting a coup.
Demonstrations in Peru left one person dead Sunday, while a congressional debate on proceedings against former president Pedro Castillo was suspended. Fires damaged Peru’s airport’s landing track and other installations leading to its closure by the aviation authority. Meanwhile, president Boluarte named a US-educated economist, Alex Contreras, who served as deputy economy minister under Castillo as economy minister, potentially soothing investor nerves after last week’s political chaos.
Peru’s congress swore in vice president Dina Boluarte as the new president on Wednesday, while Pedro Castillo was detained by police after attempting to dissolve the congress in what the constitutional tribunal described as a coup. Boluarte will be the sixth president of a politically volatile nation since the start of 2018 and the first woman to be head of state. Separately, Peru’s central bank raised its key interest ray by 25 bps to 7.5% as it struggles to bring down stubbornly high inflation. Peru’s annual inflation rate rose to 8.45% in November from 8.28% in October, mainly driven by rising food prices and supply constraints.
Peru’s congress approved impeachment proceedings against president Pedro Castillo, the third attempt to remove him since he took office less than eighteen months ago, with the government confident it can beat the new trial to remove him from office. Separately, Peru’s annual inflation rate rose to 8.45% in November from 8.28% in October, remaining well above the central bank’s 1-3% target range.
Peruvian president Pedro Castillo is facing a third impeachment proceeding after a request backed by 67 lawmakers filed Tuesday set the stage for the latest clash between his leftwing government and the opposition-held legislature. The government argued that the PM and cabinet had to resign last Thursday after congress refuted a vote of confidence. The opposition needs 87 of the 130 lawmakers in Peru’s unicameral legislature to impeach president Castillo. Two consecutive votes of no confidence allow the president to dissolve the legislature.
Peru’s president Pedro Castillo Friday swore Betssy Chavez, who was the labor minister until congress forced his resignation in May, as his fifth PM since taking power in July 2021. The fact that the president picked an ally with rocky relationships with the opposition-held congress threatens to deepen a political crisis that already saw two failed attempts to impeach Castillo. Should congress refuse to confirm Chavez, Castillo may be tempted to use a constitutional provision to dissolve the congress.
Peru’s GDP expanded by 1.66% YoY in September, little changed from the previous month’s 1.68%. The increase in GDP was mainly driven by utility output, construction, and trade. Meanwhile, the country’s unemployment rate declined to 7.2% in the three months to October, down from 9.6% in the same period of the previous year. Separately, Hong Kong will begin to work to strike a free-trade agreement with Peru. The first round of negotiations will launch in January 2023 on topics including trade in goods and services and the business environment for SMEs.
Peru’s central bank raised its benchmark interest rate by 25 bps to a 21-year high of 7.25%. The country’s annual inflation fell to 8.28% in October from 8.53% in September. The bank expects inflation to return to its 1% to 3% target range in the second half of next year. Meanwhile, the country’s trade surplus plunged to USD 689 mln in September from USD 1.625 bln in the corresponding month of the previous year.
Peru finance minister Kurt Burneo said he does not expect the central bank to stop hiking interest rates as it could spur capital flight. Burneo also mentioned that the ministry cut Peru’s 2022 GDP growth forecast to 2.7-3% this year from 3.3% in its previous estimate, citing mining social conflicts, inflation, and congress not debating bills to boost the economy.
Fitch forecasts Peru’s current account deficit to narrow to 2.3% in 2023 from 3.3% in 2022, as weaker economic activity domestically caps the country’s import growth. The agency also mentioned that growing FDI inflows and Peru’s stable stock of international reserves would allow it to continue financing its current account shortfall.
Peru’s annual inflation rate edged higher to 8.28% in October from 8.53% in the previous month, staying well above the central bank’s target range of 1% to 3%. Compared to September, consumer prices rose 0.35%, the smallest increase in eight months.
Peru’s BBB rating was affirmed by S&P with a stable outlook. The agency expects subpar economic growth this year and next and mentioned that the limited fiscal and external imbalances and still-low government debt burden continue to support the country’s creditworthiness.
Peru’s central bank raised its benchmark interest rate by 25 bps to a two-decade high of 7%. The country’s annual inflation rate accelerated to 8.5% last month, more than four times the 2% midpoint of the central bank’s inflation target. Analysts forecast Peru’s economy to grow 2.8% this year, down from more than 13% in 2021.
