Official data is out: The Peruvian economy contracted by 0.55% in 2023

The Peruvian economic activity contracted by 0.55% in 2023, dragged down by a recession triggered by political turmoil and the climatic phenomenon El Niño, as reported by the National Institute of Statistics and Informatics (INEI) on Thursday.

“The national production in 2023 showed an annual variation of -0.55%, with a significant downward impact from the manufacturing sector and, to a lesser extent, a decrease in the construction, financial, telecommunications, agricultural, and fishing sectors,” stated the INEI in a report.

In December, the economy contracted by 0.74% compared to the same month in 2022, marking seven months of declines throughout the year. In November, it had grown by 0.29%.

Against this backdrop, the government replaced the Minister of Economy and Finance, Alex Contreras, on Tuesday, who had been in office since December 2022.

Peruvian agriculture experienced one of its worst years in 2023, battered by El Niño, resulting in a “lower level of cultivated area for major crops” amidst heavy rains, or alternatively, droughts and frosts.

The agricultural sector fell by 2.91% year-on-year, affecting thousands of low-income farmers.

The recession that took hold in Peru in 2023 contrasts with the Gross Domestic Product (GDP) expansion of 2.68% in 2022.

In September, the Central Bank revised downward its annual growth projection to 0.9%, instead of the 3.4% forecasted in January.

In 2023, the sectors of Manufacturing, Fishing, Finance and Insurance, Telecommunications, as well as Construction, had an ‘unfavorable performance,’ as noted by the INEI.

Private investment was also affected in 2023 by over two months of protests and demonstrations – resulting in 49 violent deaths, including a police officer – against President Dina Boluarte.