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By Teresa Cespedes
LIMA, Jan 16 (Reuters) - Peru’s central bank said on Friday that the sharp economic slowdown over the past year likely bottomed out in November and that growth in December was “certainly” stronger than the previous month’s.
The central bank’s chief economist, Adrian Armas, said that November’s 0.31 percent year-on-year expansion, the weakest in more than five years, caught policymakers off guard.
“The reading for November was a negative surprise for everyone,” Armas said on a conference call with reporters.
But preliminary data showing stronger demand for cement and imported goods point to a rebound starting in December, Armas said.
The central bank and government officials had previously described June’s 0.34 percent year-on-year expansion as the lowest point for the global minerals exporter’s economy and that a recovery would take root in the second half of 2014.
But weak mining output, a lull in manufacturing activity and plummeting fish catches have helped upend those forecasts.
The economy grew by 2.5 percent in the first eleven months of 2014. In all of 2013 the economy grew by 5.8 percent.
The central bank cut the benchmark interest rate by 25 basis points late on Thursday after the release of growth data for November, which stoked demand for dollars and pushed the sol currency to a fresh five-year low.
Armas said concerns about the sol’s slide have eased somewhat after the central bank implemented measures to curb speculation in the local spot market late last month.
The sol, which weakened by about 6.4 percent in 2014, kept the central bank from lowering the interest rate in December because of worries doing so would fuel demand for dollars.
Armas added that inflation will cool thanks to lower oil prices and that the annual rate is expected to ease into the central bank’s 1 percent to 3 percent target range in February.
Reporting By Teresa Cespedes, Writing by Mitra Taj; Editing by Meredith Mazzilli