Peru's Economy May Be Losing Steam


In the fourth quarter of 2012, Peru maintained a strong economic growth: the GDP grew 5.9 percent yoy, one of the highest rates in Latin America. Yet, recent data updates are showing that the pace of expansion is likely to slowdown in the first quarter of 2013.

Indeed, in the first three months of 2013, exports, which have been the engine of Peru´s economic growth, declined 16.6 percent yoy, mainly due to a 19 percent fall in the shipment of gold, copper and other mining products. In the same period, the country posted its first quarterly trade deficit in more than four years, driven by a 6.6 surge in imports. Moreover, in March, business confidence decreased for the second month in a row and industrial production continued to slow down. On the positive side, inflation has been on a downward trend for more than one year, and it is rapidly approaching the official target of 2 percent, which may allow the Central Bank to cut the benchmark interest rate. In addition, although in April, consumer confidence registered a slight decline, it has been above the optimism threshold of 50 points since August of 2010.


In the fourth quarter of 2012, Peru´s economy expanded 5.9 percent yoy, up from the 5.5 percent registered in the same quarter of 2011. The expansion was mostly driven by 7 percent increase in private consumption and by a 15.6 percent rise in public expenditure.
 
In March, exports decreased 16.2 percent to $3492 million from the $4168 million registered in the same month a year earlier. Moreover, in March, Peru´s trade surplus narrowed 73.9 percent to $200 million from the $766 million registered in March of 2012. 
     

In March, industrial output increased 3.01 percent yoy, down from the 4.98 percent expansion registered in the previous month. In March, business confidence declined to 65, the lowest level since December.
 
In the 12 months through April, the inflation rate rose 2.3 percent, reaching its lowest value in more than six months. On May 9th, the Central Bank of Peru decided to maintain the key policy interest at 4.25 percent for the 24th consecutive month.

 


Duarte Ricardo | duarte.ricardo@tradingeconomics.com
5/15/2013 6:58:35 PM