Owing to the positive contribution of new
mining operations, the Peruvian economy is growing at a quicker pace than
its regional peers, which are suffering from a lacklustre global expansion.
In fact, the Peruvian economy is seen to be the fastest growing economy this
year. However, the pace is clearly unsustainable as the one-time effects
from mining are beginning to wane and next year, Peru will face a
considerably slower growing economy.
Mining boost abating but activity
The economy continues to
develop favourably. In August, the indicator for gross domestic product
(GDP) advanced 3.8% compared to the same month last year, the same growth
rate as reported for July. The growth rate is noteworthy, given that
August constitutes the second month, in which the favourable statistical
comparison effect in mining, which had boosted economic growth over the
past year, is not adding to the overall economic performance. That said,
mining actually lifted growth in August to the same level as the preceding
month. In August, the sector, which accounts for close to 5% of total
economic activity expanded by 6.5% over the same month last year. In July,
mining added only 1.8% over July 2001, the first single-digit reading
since the same month last year. Stronger mining in August compensated for
lower growth rates in virtually all other sectors: Agriculture and
livestock dropped 0.5% over August 2001 compared to 1.2% growth in July;
manufacturing grew by an annual 4.1% rate after 5.4% in July; construction
added 7.8% (July: +13.5%); commerce grew 1.0% (July: +1.3%) and so-called
“other services”, which account for the lion share of GDP in national
accounting system of the National Statistical Institute (INEI), increased
3.3% after 4.0% growth in July. The only sector apart from mining that
experienced an improvement over July was fishing. The sector remained
virtually unchanged compared to the same month last year (+0.1%) but this
in fact constitutes an improvement over the small decline ( -0.7%)
reported for July).
INEI changes methodology
In late October, INEI announced that would it publish only quarterly GDP
numbers from now on, instead of monthly. However, the institute said it
would continue to provide a sector-by-sector breakdown each month.
According to INEI, they are adjusting the methodology to make the figures
more precise, in particular, the sector “others,” which includes
government and financial services, would be adjusted. “Others” currently
accounts for some 39.2% of the GDP tally, while a separate category to
cover import duties and other taxes accounts for 9.7%. The GDP statistics
have been subject to frequent criticism that they do not accurately
reflect the economic reality. Only last year, INEI came forward with the
long waited for change of the base year to 1994 for the calculation of the
national accounts. INEI further announced that sector-by-sector figures
would be published in November but it was not clear when full
third-quarter GDP data would be out.
Outlook lifted – Peru now seen as
fastest growing economy in the region
Given the healthy growth reported for the first two months of the third
quarter and the absence of a serious threat to the Peruvian economy,
panellists have again lifted their 2002 GDP growth outlook. The Consensus
rose by 0.3 percentage points since last month and is thus in line with
the current government forecast. This puts Peru in the number one position
in terms of economic growth in Latin America. The forecast for next year
was maintained unchanged, despite worsening prospects for a global
recovery in 2003.
The above text is an abridged version of the LatinFocus Consensus Forecast
briefing on Peru. For more details please click here.