Peru’s Government on Tuesday lowered its economic growth forecasts for this year and the next, citing poor private investment in the country’s copper industry, the El Niño weather phenomenon and social unrest.

The Ministry of Economy and Finance (MEF) said in Peru’s official gazette, El Peruano, that the economy is now set to grow by 1.1% in 2023. This is down more than half from a previous estimate of 2.5% after data showed the economy shrank in the first half of this year. This would mark the slowest annual growth rate for the country since 2009, excluding 2020, when the Covid-19 pandemic first began to disrupt global business.

Between 2024 and 2027, the economy is forecast to grow by more than 3%, the MEF said, although this too is down from a previous estimate of 3.4%. The recovery of growth in the second half of this year will come from improvements in domestic demand, driven principally by private spending, the dissipation of social conflicts and strengthened investment in infrastructure, the ministry added.

Increased mining production will be a key area for private investment. Private investment in the mining and metals industry is expected to drop by 4.5%, although production is set to grow by 7% by the end of 2023. The MEF said that new investments in mining projects will reach almost $7bn (25.8bn sol) over the next four years.

The country is the world’s second-largest copper producer, falling behind Chile. Prices for the metal have fallen from an average of $400 per pound (/lb) in 2022 to approximately $380/lb this year, with prices projected to fall even lower next year, according to Reuters.

Finance Minister Alex Contreras said in a press conference on Tuesday that the government was working “intensely” to reverse the downward economic trend, adding that inflation was slowing, with the annual rate set to dip to 4% by the end of this year.

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The El Niño climate event is also set to impact the country’s fishing industry as warmer waters affect marine ecosystems, the MEF also said. This has devastated production of the anchovy-based fertiliser fishmeal, a sector in which Peru leads globally.

The government has also said that warmer weather is likely to bring greater rainfall, threatening infrastructure across the country and potentially damaging its agriculture industry.