Peru Economy Slows in June Due to El Niño

Peru's economic activity index rose 1.75% year-on-year in June, falling short of the 2.3% median estimate from economists. The slowdown resulted primarily from unusual weather conditions caused by El Niño, which triggered a 51.94% slump in fishing alongside declines in agriculture, manufacturing, and mining.

Despite these losses, the Government of Peru reported that output for the first semester of the year increased by 3.05%. Growth in the construction and retail sectors helped offset some of the primary industry losses. President Keiko Fujimori's administration continues to target annual growth between 3.5% and 4%, citing strong overseas demand for gold, copper, and fishmeal as well as robust investment.

The Central Reserve Bank of Peru maintained borrowing costs at 4.25% for the 11th consecutive month. Bank officials characterized inflation risks stemming from weather patterns and conflict in the Middle East as temporary factors that do not currently warrant a change in interest rates.