In 2017, Peru’s gross domestic product (GDP) grew by 2.5%, according to figures published last week by the national statistics office (INEI). This is the slowest rate of growth since 2014, and compares with 4.0% in 2016 and 3.3% in 2015. In the first decade of the new millennium Peru’s growth averaged over 5%.

Despite the impact of lower commodity prices (especially for copper), Peru’s rate of growth in 2015 and 2016 was sustained by increases in the quantity of minerals produced, especially from the all-important Chinese-owned mining operations Toromocho (in Junín) and Las Bambas (in Apurímac).

Notwithstanding a rise in copper prices in 2017, the slower rate in 2017 was largely attributable to two separate shocks: the impact of the Lava Jato scandals in halting major public investment projects (especially the South-Andean gas pipeline) and the effects of the disastrous floods in northern Peru resulting from last year’s El Niño phenomenon.

Furthermore, it is also partly attributable to a government that appears increasingly in disarray and subject to policy paralysis. The effects of constant changes in the leadership of key ministries are having a negative effect on the design and execution of economic and social policies.

With the economy growing by only 2.5%, employment rates are not increasing whilst poverty rates may now be rising. This, in turn, will further affect people’s faith in a government that is floundering from repeated attack from an implacable political opposition.

The 2.5% growth rate is well below the official estimates made at the beginning of last year. For this year, the Ministry of Economy and Finance (MEF) projects growth of over 4%. Wishful thinking?