The result is cautionary tale for other emerging markets: the nation of almost 33 million people is now trying to contain an economic free-fall that shocked even its most experienced policy makers.

“We continued in lockdown as if we were a high-income country that could bear a prolonged quarantine,” said BBVA Peru Chief Economist Hugo Perea in an interview. “The economic impact has been very severe.”

The central bank forecasts the economy will shrink a record 31.9% in the second quarter from a year earlier, following an eye-watering plunge of almost 41% at the peak of the lockdown in April.

“Not in my worst nightmares could I have imagined the economy could drop 40% in a month,” said Julio Velarde, whose 14-year tenure at the helm of Peru’s monetary authority makes him one of the world’s longest-serving central bankers. Thousands of firms have gone out of business and mass unemployment could push the poverty rate to its highest in almost a decade, he said.

Read More: Peru Central Bank Committed to Providing Strong Stimulus

The World Bank projects a 12% contraction for Peru this year, the deepest after Belize and the Maldives. Some forecasters expect a drop of as much as 17%.

The government’s statistics agency will report May economic activity Wednesday and the median estimate of economists surveyed is for a 32.5% drop, the second worst on record.

Turning Around

Peru’s confirmed deaths from the virus exceed 12,000 people though unofficial figures are almost three times that, giving the country one of the highest per capita death rates in the world.

President Martin Vizcarra, who initially saw his popularity soar thanks to his quick response to the pandemic, now faces accusations of mishandling both the health care and economic crisis.

While the Andean country unveiled in April a sizable stimulus package worth about 12% of its gross domestic product, its implementation faced logistical difficulties.

Six out of every 10 people don’t have a bank account, which slowed down the distribution of cash handouts, and aid for companies, such as cheap loans and tax relief, benefited the minority of firms that operate in the formal economy.

Read More: Peru’s Record Slump Wipes Out Decade of Economic Expansion

Some parties in the opposition-controlled congress have tabled a motion to summon Finance Minister Maria Antonieta Alva and other ministers to congress for questioning. Such interrogations can sometimes lead to a censure vote.

“As a country what we had to do many years ago was solve structural problems” that have “made us very vulnerable during the crisis,” Alva said at the Bloomberg Emerging and Frontier Forum on June 25. “We had to take these very aggressive measures.”

The government has started to reverse course and expects to have 95% of the economy operating again by the end of this month. For many businesses the reopening was too slow and new health protocols were unrealistic, fueling criticism of Vizcarra administration’s heavy-handed approach to the crisis.

“They shouldn’t have shut everything,” said Angel Arana, who owns a small clothing workshop in downtown Lima. “Lots of businesses could have continued operating during the lockdown just as they’re doing now. The whole population is paying the price of that decision.”

To bolster the recovery of an economy that was already slowing before the pandemic, the government should grant companies tax incentives to rehire workers, accelerate infrastructure projects and do more to boost business confidence, said Alfredo Thorne, a former finance minister.

Preliminary indicators for June and July show the economy is headed for a V-shaped recovery, according to Alva.

Though growth should return fast in 2021, it will probably take years for Peruvians and the government’s finances to recover. By the end of next year, the economy could still be 7% or 8% smaller than it was just seven months ago, BBVA’s Perea said.

“Absorbing this drop will be a very difficult process,” he said. “There’s been a lot of destruction of jobs, families and companies are going to be indebted and very cautious about spending.”