Peru: Economic activity expands at the slowest pace in 14 months
June 20, 2011
In April, economic activity expanded 7.4% over the same month last year, which was below the 7.7% increase tallied in March, but beat market expectations of a 7.0% rise. The expansion represented the slowest pace since February 2010. A month-on-month comparison, however, does not confirm the slowdown suggested by the annual figures, as economic activity jumped a seasonally adjusted 2.11% over the previous month, up from March's 0.38% increase. The weaker monthly reading mainly reflected slower growth in manufacturing (March: +10.3% year-on-year; April: +9.2% yoy) and a contraction in mining (March: +2.7% yoy; April: -4.0% yoy). As a result of the monthly deceleration, the trend continues to point to a moderation in economic activity, with the annual average variation in economic activity dropping from 9.4% in March to 9.2% in April, which marked the slowest pace of growth since December 2010. The Central Bank revised its growth forecast and now expects the economy will grow 6.5% this year, down from its previous 7.0% estimate. The adjustment reflects increasing concerns that the newly-elected President Ollanta Humala will raise taxes on the mining industry, which would dent foreign investment. For 2012, the Central Bank expects the economy to maintain the same pace.
Author: Ricardo Aceves, Senior Economist