The government of Peru launched a package of economic measures, including discounted loans for farmers, in a desperate attempt to protect the economy from sliding deeper into recession.
Peru is grappling with its worst economic downturn in decades, triggered by devastating floods, persistent labor unrest and rampant political instability, among other factors.
Its economy contracted 1.29% (y-o-y) in September, a far worse performance than economists anticipated. The country’s mining sector, a critical pillar of the economy, has been hit particularly hard. Mining pits have fallen silent due to prolonged political instability following the removal of President Pedro Castillo.
Earlier this month, Economy Minister Alex Contreras expressed optimism about the new measures, stating that they would increase funding for public and private projects by up to US$8 billion.
However, economists remain skeptical, citing the government’s instability, which has seen the resignation of two ministers this month alone.
Interior Minister Vicente Romero stepped down after being censured by Congress for his perceived failure to combat crime. Foreign Minister Ana Gervasi resigned following President Dina Boluarte’s inability to secure bilateral talks with her US counterpart Joe Biden during her recent visit to Washington D.C. Adding to the political turmoil, Congress is now considering a censure motion against Mining Minister Oscar Vera.
The Peruvian government’s efforts to revive the economy will face significant challenges amidst the ongoing political unrest and deep-seated economic woes. Whether the government’s stimulus measures will prove effective remains to be seen.
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