Peru Economy Performs Worse than Predictions

The economy of Peru slowed down more than what was expected by the analysts in last March. The global growth has gone to a weaker level and it is reducing the demand of the manufacturing and metal exports of the country, thereby causing decline in this Latin American country’s growth. If compared to the values of a year earlier, the economic activity increased by 3%, as mentioned in a report published by the National Statistics Agency. However, the economists predicted that the same will surge ahead by 4.5% and the actual result is way below than that. Incidentally, this is the weakest pace of growth of Peru since October, 2009.

Slowing economy of China and the ongoing recession in the Euro region has dampened the growth of Peru. Incidentally, Peru is the 3rd largest copper and zinc exporter in the world. The central bank of Peru cited slowing inflation and weak global markets on 9th May as rationale for keeping the benchmark lending rates at 4.25%. The rates are now at the very same level for the 24th straight month.

According to the Bond Trader at the BBVA Banco Continental, Walther Benavides, this figure will be putting the Central Bank of Peru on its guard; however, it is possibly not going to lead to a rate cut. Benavides added further that the current trend in the Gross Domestic Product is of declining. If the growth stays at around 3% for another month, the Central Bank will be forced to adjust the language of the communications at least.

As far as initial estimates are concerned, the Gross Domestic Product of Peru is expected to grow 6.5% in 2013. If this happens, the Gross Domestic Product will be exceeding the average of that of the Latin America by more than a couple of percentage points.

In last March, the manufacturing of Peru experienced a decline of 3.6%, if compared with the value of last year. This was responsible in partially offsetting the increase of 3.8% in construction and 4% in that of retail.

Exports of Peru declined by 16% in last March from its 2012 value, marking 4th straight monthly decline. Annual inflation however eased to 2.31% on last month, marking the lowest value in the last couple of years. Sol, the major currency of Peru declined by 0.8% and is at 2.6250 per USD.