Bloomberg News

Peru’s GDP Growth Accelerates for First Time Since 2010

May 25, 2012

Peru’s economic growth accelerated in the first three months of the year for the first time in seven quarters as stimulus measures by the government sparked a rebound in investor confidence.

Gross domestic product rose 6 percent from the year earlier, the government’s statistics agency said today in an e-mailed report. Growth picked up from 5.5 percent in the previous three months after slowing every quarter since a peak of 10.1 percent in the April-to-June period of 2010.

Business sentiment rose to a one-year high last month as the government implemented stimulus measures worth almost 2 percent of gross domestic product to offset weaker export growth, and companies stepped up hiring and investment. Policy makers are ready to tighten monetary policy if they see domestic demand stoking inflation that’s been above target for 10 months, President Julio Velarde said May 22.

“The central bank will likely keep rates on hold as inflation will slow and the international context urges caution,” said Juan Odar, an economist at Banco de Credito del Peru, by phone from Lima. “Growth will stay around 6 percent this year and isn’t likely to create inflationary pressures.”

Domestic demand climbed 6.3 percent in the first quarter as a rebound in construction spurred a 16 percent jump in fixed asset investment, the agency said. Construction activity, which rose 3.4 percent last year, jumped 12 percent on stronger private investment and government infrastructure spending.

Retail activity climbed 7.9 percent while manufacturing contracted 0.9 percent, amid reduced exports of textiles and lower output of fish products, the agency said.

Consumer prices rose 0.5 percent last month and climbed 4.1 percent from a year ago, the agency said May 1.

The yield on the nation’s benchmark 7.84 percent sol-denominated bond due August 2020 rose for a seventh day, climbing one basis point, or 0.01 percentage point, to 5.37 percent as of 10:17 a.m. in Lima, according to prices compiled by Bloomberg.

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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