Peru’s economy will fall into recession in the final months of 2023, according to Bank of America.

The Peruvian economy will face a technical recession in the second half of next year, a Bank of America (BofA) report warns.

In the first and second half of 2023, growth of 2.8% and 1.6%, respectively, is expected, but in the second half of the year it is expected that GDP start falling.

BofA forecasts indicate that in the third quarter of next year, that is, between July and September, the national economy will fall by 0.4%. Similarly, a 0.4% drop is projected over the past three months, signaling a recession.

Despite these falls productionthe projected average growth for 2023 is 2.5%, higher than the estimated progress for countries such as the US, Brazil, Mexico and Chile.

The report indicates that Peru, along with Mexico, will be the two Latin American economies that will enter recession in the coming quarters.

What is a recession? A recession implies that a country’s economy will have at least two consecutive quarters of falling GDP, meaning its production will decline for six consecutive months.

It is worth noting that the latest forecasts of the International Monetary Fund (IMF) indicate that in 2023 at least a third of the world’s economies will enter a technical recession.

Despite the negative economic outlook for Peru in 2023, BofA indicated that the country has outstanding financial performance.

” financial stability reduces the likelihood of the country’s rating being downgraded in the next 12 months.

The organization also stressed that the level of government deficit will also remain stable, and points out that Peru’s debt is one of the lowest in the region, along with the debt of Chile, Guatemala and Paraguay.

How does the crisis affect us?

A recession implies lower growth, which leads to lower consumption, lower investment, and fewer jobs.

“With low growth, we have problems with Work qualitative. The recessive scenario assumes less economic activity, implies fewer opportunities for hiring people not only in the formal but also in the informal sector. It is less likely that conditions and well-being of the population could improve,” economist David Tuesta told RPP a few weeks ago.

Why is there a recession warning in 2023?

An International Monetary Fund (IMF) report indicates that most of the world will face or eventually fall into a recession over the next year.

As noted, factors that will continue to influence economy and the war between Russia and Ukraine, which gave rise to an energy crisis in Europe, can lead to a global recession; inflation, which will be set at 11.4% for Latin America in 2023; yy Chinese economic slowdown.