UPDATE 1-Peru economy set for 12% plunge in 2020, worst in three decades

(Adds quotes from economy minister, more details)

LIMA, Aug 27 (Reuters) - Peru’s mining-driven economy, one of the hardest-hit by the coronavirus pandemic, is expected to contract 12% this year - its deepest plunge in three decades, the economy ministry said on Thursday.

The Andean country hasn’t taken such a hit since a 12.3% contraction in 1989, said Economy Minister María Antonieta Alva.

Growth is expected to rebound 10% in 2021, however, on an increase in domestic consumption and public and private investment.

The world’s second-largest copper producer, which has recorded over 600,000 confirmed cases of COVID-19, saw its economy tumble over 30% in the second quarter of the year, one the deepest falls in the world.

Alva predicted that the fiscal deficit will rise this year to 10.7% of gross domestic product (GDP), up sharply from a deficit of 1.6% in 2019.

“We cannot deny that the COVID crisis has severely impacted the economy, especially in the first half of the year,” Alva said to reporters at a virtual press conference.

“It is definitely one of the most complex crises due to the external and internal factors,” Alva added.

Peru imposed a strict quarantine in March as the coronavirus pandemic took hold, halting almost all production. Since May, however, the government launched a staggered reopening of its economy amid a fiscal stimulus equivalent to almost 20% of GDP, Alva said. (Reporting by Marco Aquino; Writing by Adam Jourdan and Cassandra Garrison; editing by Richard Pullin)

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