Bloomberg News

Peru’s Economic Growth Accelerated to 6% in December

February 17, 2012

(Updates with analyst’s comment in fourth paragraph.)

Feb. 16 (Bloomberg) -- Peru’s economic growth accelerated in December for the first time in four months as a jump in fishing output masked weaker expansion in other industries.

The economy expanded 6 percent from a year earlier, compared with revised 5.1 percent growth in November, the government’s statistics agency said today. December’s growth was faster than the 5.5 percent median forecast of 13 analysts surveyed by Bloomberg and brought full-year expansion to 6.9 percent.

Peru’s government is boosting infrastructure spending as part of a $3.5 billion effort to offset slower growth in metal and manufacturing exports. December’s pickup may be temporary as the fiscal stimulus won’t be enough this year to offset weaker demand for metals from China and local opposition to mining projects, Vicente Tuesta, head of investment and research at Prima AFP, the country’s biggest pension fund.

“The economy needs a confidence shock in order to kick- start investment in these projects,” Tuesta said in a phone interview from Lima. “That can only be achieved through a resolution of social unrest and an improvement in the global economy, particularly China.”

Fishing production leaped 74 percent in December from a year earlier, while mining, oil and gas output rose 4.2 percent and manufacturing expanded 3.7 percent.

Mining Protests

Newmont Mining Corp. halted work on a $4.8 billion copper and gold mine, the country’s biggest-ever investment project, in November following protests by local residents concerned the project will deplete water resources. The government has ordered an environmental review before construction work resumes.

Southern Copper Corp., the country’s biggest copper producer, said Feb. 9 it had rescheduled the start up of its Tia Maria mine to 2015 after the government rejected an environmental study last year following local protests.

“As long as there are these social tensions it’s going to be difficult for investors to move forward rapidly,” said Tuesta. “They’re going to do it little by little.”

Peru’s central bank kept its benchmark rate at 4.25 percent for a ninth straight month on Feb. 9 pointing to signs economic activity is moderating.

The central bank cut its growth forecast for South America’s sixth largest economy to 5.5 percent on Dec. 16, from 5.8 percent three months earlier.

Mining investment continues in Peru without any “anomaly” after an increase in unrest last year, Adrian Armas, the central bank’s research director, told reporters Feb. 10.

--Editors: Philip Sanders, Richard Jarvie

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.


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