Peru: Current account deficit widens in third quarter
November 26, 2010
In the third quarter, the current account balance registered a deficit of USD 846 million (equivalent to 2.2% of the GDP), which was larger than the USD 354 million deficit observed in the second quarter. The deterioration in the current account was mainly the result of a wider deficit in both the income balance and the services balance. In addition, the surplus in the trade balance narrowed from USD 1.5 billion in the second quarter to USD 1.4 billion in the third quarter, as a result of slowing growth in exports and a notable acceleration in imports. On an annual basis, exports grew 29.2%, down from the 32.4% increase observed in the second quarter, while imports posted a 46.7% expansion (Q2: +36.9% year-on-year), which represented the fastest pace in over two years. As a result of the quarterly reading, the moving annual current account deficit increased from a USD 356 million in the second quarter to a USD 1.5 billion deficit in the third, which represented 1.0% of GDP. The Central Bank expects the current account will post a deficit of 1.0% of GDP this year.
Author: Ricardo Aceves, Senior Economist