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Economy remains on
favourable path
February data confirm that a recovery is well under way as the economy
expanded 3.3% compared to the same month last year. The February
performance constituted the seventh consecutive month of economic growth
following on the recession, which had lasted one year, and thus confirms
further that the Peruvian economy has left the valley behind.
Nevertheless, the February growth figure remained below expectations and
the 3.9% expansion reported for the first month of the year.
Mining continues to push
economy out of recession
The
mining sector was key driver behind the February economic rebound,
following the pattern observed in previous months. In February, mining
added 19.7% over the same month last year, as the year-on-year comparison
remained favourable, owing to the fact that the Antamina copper-zinc mine
located in northern Peru was not yet operative in February last year.
However, the dynamism appears to be ebbing, when comparing the February
performance to the growth rates registered in the preceding three months,
where activity expanded in excess of 20%. Other sectoral performance is
also improving but despite its relatively small weight in the Peruvian
economy of below 5%, mining currently still accounts for the lion share of
economic growth.
Recovery spilling over to
other sectors but still fragile – forecasts remain unchanged
As in
January, fishing was the only sector to experience a contraction in
January. The sector once again plunged a hefty 22.3% compared to the same
month last year. Thus the 6.0% annual decline registered in January just
marked a brief respite following the huge contractions registered in
November (-54.1% year-on-year) and December (-38.0% yoy). While fishing
accounts only for a tiny share of total output, the slump registered in
February sent its repercussions to other parts of the economy. Growth in
the manufacturing industry was barely positive at 0.3%, as primary
manufacturing based on raw materials suffered from a lack of input from
the fishing industry. The dismal February growth compares unfavourably to
the 1.5% expansion reported for January. Only two months ago (in
December) the manufacturing industry was still in recession. The February
reading shows that the general economic recovery is still fragile and has
yet to trickle down to all sectors of the economy. Electricity and water
output grew by 4.8% over February 2001 and remained one of the most stable
economic sectors. The construction sector continues to pull free from
three recessionary years, which lasted until September last year. While
the sector experienced a slowdown from the 15.6% expansion registered in
January, the 13.0% February growth rate is still very healthy and confirms
the optimistic outlook of the sector’s professional organisation.
Panellists maintained their economic growth outlook unchnaged over since
last month. The speed of the recovery will pick up towards the end of the
year, which will provide a solid backdrop for the anticipated stronger
expansion in 2003.
Note:
The above text is an abridged version of the LatinFocus Consensus Forecast
briefing on Peru. For more details please click here.
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