Peru’s June GDP growth slows to 1.75% amid weak demand

Peru’s economic growth decelerated to 1.75% year-on-year in June, the National Institute of Statistics and Informatics (INEI) reported on Wednesday.

The expansion trailed May’s revised 2.1% growth and fell short of the 1.8% median estimate in a Reuters poll, reflecting weaker domestic consumption and softening external demand. The June reading marks the slowest pace since February, when GDP grew 1.5%.

INEI attributed the slowdown to declines in construction, manufacturing and trade sectors, which offset gains in mining and agriculture. Construction activity contracted 3.2% year-on-year, while manufacturing output fell 1.8%. Mining, however, expanded 4.7%, driven by copper and zinc production, and agriculture grew 2.3%.

The data underscores challenges for Peru’s economy, which has struggled with political instability, social unrest and declining investment in recent quarters. The central bank has maintained its benchmark interest rate at 6.25% since March to curb inflation, which remains above the target range of 1%-3%.

Analysts expect growth to remain subdued in the second half of the year, with risks tilted to the downside amid persistent uncertainty and weak global demand.