GDP revision reduces 1999 growth to 1.4%.  On 30 June the National Statistical Institute (INEI) came forward with the much-awaited revision of its national accounting system.  The INEI revision updated the 21-year-old base data to use 1994 figures for calculating economic activity.  As expected, the change in base year resulted in a heavy cutback of output in the range of 10.2%.  According to the revised data, the economy produced US$ 52.028 billion (175.856 billion soles) in goods and services last year instead of the US$ 57.942 billion (195.844 billion soles) under the old accounting system.  The revision also prompted a downward revision of GDP growth figures from an annual average of 4.5% to 4.2% for the period between 1991 and 1999.  For 1999, official growth figures dropped from 3.8% to 1.4%.  Furthermore, the change in the accounting system resulted in a major shift of weights for the main sectors of the economy, which reflect just how distorted the old figures were:  The primary sector (i.e. agriculture) now accounts for only 13.5% of GDP as opposed to 24.7% of GDP under the old accounting system.  The secondary sector (industry) experienced a 1.8% downward adjustment from 28.7% of GDP to 26.9% and the tertiary sector (services) now accounts for 59.6% of GDP instead of the 46.6% under the 1979 accounting method.

Growth pace faster than expected in May.  In May, economic activity, calculated with the new 1994 base year, increased 6.6% over May 1999.  The result was well above market expectations, which hovered around 4.5% using the old accounting system.  Furthermore, the May economic performance represented an improvement over last month’s revised 4.8% growth rate.  Within the first five months, GDP was up 6.2% compared with the same period last year.  Economic activity was driven principally by the primary sectors.  Fishing led the other sectors in growth, expanding 31.0% year-over-year and was up 21.6% in the first five months of the year compared to the same period the year before.  Manufacturing expanded 13.1% year-over-year, due to a healthy expansion in primary manufacturing, which profited from higher fishmeal production.  Performance in the non-primary manufacturing industry was mixed.  While machinery and equipment production increased 38.8% and paper manufacturing spiked 52% on an annual basis, chemicals and metals production disappointed, expanding 6.9% and 2.8% respectively - below April levels.  The construction sector rebounded from last month’s 7.4% contraction with a 6.9% expansion in May.  

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