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The chairman of the Central Reserve Bank of Peru shares insights with Global Finance.
Global Finance: In Peru, the recession caused by the Covid-19 pandemic slammed the brakes on the economic expansion that started in 2019. What are your expectations for the country's economic outlook for the rest of 2020 and for 2021?
Julio Velarde: In the context of the Covid-19 pandemic, Peru's GDP is expected to drop 12.5% in 2020, the largest contraction in the last 100 years, due to the impact of a protracted and widespread lockdown on economic activity. The largest decline is estimated to have occurred in the second quarter of the year (-30.2% year-over-year), but a gradual recovery is expected in response to reopening measures. Along these lines, growth is expected to rebound to 11.5% in 2021, and economic activity is forecasted to recover to pre-crisis levels by 2022.
Real-time economic indicators confirm this. For example, daily electricity production is currently just 3% below 2019 levels, after falling by around 30% during the lockdown. Similarly, the value of card transactions has increased continuously since the restart of economic activities. In this context, 12-month ahead business expectations have recovered and are in positive territory since June.
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