Bloomberg News

Peru’s Economic Growth Slowed to an Annual 5.4% in January

March 15, 2012

Peru’s economic growth remained in a band of 5.1 percent to 6 percent for a fifth consecutive month in January as retail activity picked up and mining contracted.

Economic (PRGDPYOY) activity expanded 5.4 percent from a year earlier, compared with 6 percent growth in December, the government’s statistics agency said today in an e-mailed report. The median estimate of 10 analysts in a Bloomberg News survey was for 5.5 percent growth.

Peru’s economy has fared better than expected amid a slowdown in global demand for its metals and manufacturing exports, Finance Minister Miguel Castilla said March 9, lifting his forecast for 2012 growth to 5.7 percent from 5.5 percent. Peru, Mexico and Chile are expected to keep their benchmark lending rates on hold as global conditions improve, said Roberto Melzi, a Latin America strategist at Barclays Capital Inc. in New York.

“We should see growth quicken in the coming months as long as problems in the global markets keep receding and the recovery in business confidence strengthens,” Juan Carlos Odar, senior analyst at Banco de Credito del Peru (CREDITC1), said in a telephone interview from Lima.

Peru’s central bank maintained its key rate at 4.25 percent for a 10th month on March 8 after exports climbed 35 percent in January and business confidence rose to a one-year high in February.

Slower Inflation

Inflation, which held at an annual 4.2 percent in February, will return to the central bank’s 1 percent to 3 percent target range about mid-year, the central bank said.

Environmental protests in Peru that led Newmont Mining Corp. (NEM) to halt work on its Minas Conga copper and gold project in November threaten to crimp growth.

“We need to see whether the government is successful in dealing with Conga,” Melzi said in a phone interview from New York. “Social unrest is a medium- to long-term risk that could affect Peru’s ability to grow at rates of 5 percent to 7 percent.”

The Peruvian sol was unchanged at 2.6710 per U.S. dollar at 9:01 a.m. in Lima, according to Deutsche Bank AG’s local unit.

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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