The commodity price slump and a shortage of anchovies are dragging down Peru’s economy, formerlyone of Latin America’s star performers.
The slowdown is surprising because the International Monetary Fund (IMF) had previously been extremely positive about Peru. Between 2002 and 2012, it had both the highest growth rate and the lowest inflation of any country in South America.
But now, the crumbling price of the copper is hurting the country as Peru is the third-largest producer of the mineral in the world.
A sudden shortage of anchovies also poses a problem. Peru may be a leading copper producer, but it produces more anchovies than any other country in the world — by miles.
Sixty-seven per cent of the world’s anchovies are fished in the Pacific Southeast, giving Peru a 57% share of the world’s total catch, according to 2009 figures from Eurofish:
So when production falls, that’s a surprisingly big deal. Fisheries output dropped by an astonishing 68% in Peru in November, compared to the same month last year. Output across the economy grew by only 0.31% from the same month last year, the slowest pace of growth in years.
Getting hit by a slump in copper prices would be a problem for the country, as would getting hit by an anchovy shortage. But getting hit by both at the same time is just adding insult to injury.