Peru: Economic growth slows in October
December 15, 2010
In October, economic activity rose 8.3% over the same month last year, which was below the 10.4% expansion observed in September and also below market expectations of a 9.3% rise. The deceleration was mainly the result of slower growth in the manufacturing sector (September: +16.7% year-on-year; October: +14.7% yoy), as well as in commerce (September: +11.0% yoy; October: +8.0% yoy). In addition, the construction sector grew 10.7%, less than half the 23.0% expansion observed in September. Despite the deceleration, the trend continues to point to a strong recovery, with annual average growth in economic activity rising from 7.4% in September to 8.0% in October, the highest level since February 2009. A month-on-month assessment confirms the deceleration suggested by the annual data, with economic activity increasing 1.05% in October, below the 1.98% rise registered in September. Meanwhile, on the back of the economy's strong fundamentals, the Central Bank revised its growth estimate for 2010 to 8.8% from the previous estimate of 8.0%. For 2011, the Bank expects the economy to expand 6.5%, up from the 6.0% previously expected. In the same vein, the Minister of Economy, Ismael Benavides sees the economy growing between 8.7% and 9.0% this year.
Author: Ricardo Aceves, Senior Economist