Peru: Current account deficit shrinks in the final quarter of 2010
February 25, 2011
In the fourth quarter, the current account registered a deficit of USD 531 million (equivalent to 1.4% of GDP), which represented an improvement compared to the USD 889 million deficit (2.3% of GDP) observed in the third quarter. The fourth quarter reading mainly reflected a larger trade surplus, which widened from USD 1.5 billion in the third quarter to USD 2.1 billion in the fourth, as a result of slowing growth in imports. On an annual basis, exports grew 23.8% in the fourth quarter (Q3: +29.6% year-on-year), while imports decelerated from a 46.6% expansion in the third quarter to a 34.9% increase in the fourth. In addition, the current transfers balance improved compared to the third quarter, on the back of higher remittances from workers from abroad. In the full year 2010, the current account incurred a deficit of USD 2.3 billion (equivalent to 1.5% of GDP), fuelled by increasing imports of goods and services, which were buoyed by strong domestic demand. The reading contrasted the surplus of USD 0.2 billion (equivalent to 0.2% of the GDP) tallied in 2009. The Central Bank expects the current account will post a deficit of 3.1% of GDP this year, before shrinking further to a deficit of 3.2% for 2012.
Author: Ricardo Aceves, Senior Economist