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Economy maintains high pace in
second month of the year
The economy continues to develop along the favourable trajectory, which
puts it at the helm of the Latin American economies. In February, the
economy expanded by 5.3% compared to the same month last year, stepping up
the speed from the 4.6% expansion registered in the first month of the
year. The strong February performance was mainly driven by the primary
sector, which accelerated from a lacklustre 0.7% expansion in January to
3.8% growth in February, amid strong mining and fishing. Non-primary
economic activity increased 5.7%, virtually unchanged from January.
Mining and fishing boost growth in February
In February, the annual growth in mining and fuels reached 9.3%, which was
more than triple the January rate. The robust reading reflects a
particularly strong performance of gold, silver and copper mining and a
positive contribution from virtually all other minerals. Fuels actually
declined over February 2002, albeit at a lower rhythm than in January.
Fishing constituted the second fastest growing sector in February.
Activity expanded 7.2% over February 2002, following on 24.1% contraction
in January. This type of volatility in the fishing sector’s growth rate is
not unusual, as changes in climatic conditions in the Pacific Ocean and
the imposition or lifting of government-mandated fishing bans do not
provide a foundation for a stable growth path. In February, the fishing
sector profited from greater catch of jurel and mackerel, amid favourable
climatic conditions. Anchovy fishing, which accounts for almost half of
total fishing, on the other hand, continued to decline as the
government-imposed fishing ban remained in force in large parts of the
coast. The February recovery in fishing also fed through to raw material
manufacturing, which rebounded from a 10.1% contraction in January to a
much more moderate 0.3% decline in the second month of the year.
Non-primary manufacturing activity, on the other hand, slowed compared to
January but remained at a robust 5.4% annual growth rate. The strength in
non-primary manufacturing is mainly due to vigorous production of consumer
goods, since intermediate and capital goods are expanding at a more
moderate pace.
Construction returns after bout of weakness in January
Construction reverted from a bout of weakness observed in January and
resumed the strong expansion observed since October 2001. In February, the
sector expanded 4.7%, mirroring a decline of the same magnitude in
January. Activity in the sector profited from higher housing and road
construction, where the latter was boosted by the execution of the
Inter-Ocean Southern Corridor. The agriculture and livestock sector grew
1.4% in February, down from 4.6% year-on-year growth in January, amid
lower output of rice and potatoes. Services developed mostly along the
lines observed in January. Commercial activities slowed from 6.8% growth
in 5.1% in February, whereas other services added from 5.7% to 6.0%
growth.
Outlook for this year stabilises at high level
According to this month’s Consensus, the favourable development in the
first two months of the year is likely to have persisted throughout March,
boosting economic activity by 5.5% in the first quarter this year over the
same period last year. Such a reading would represent the fourth
consecutive quarter of growth exceeding 5%, a rate that is unlikely to be
sustainable given the current fundamentals of the economy. Even though
economic growth will benefit from some large scale investment projects,
mainly the giant Camisea gas project, the higher comparison base of last
year will kick in as of the second quarter this year. In fact, Consensus
Forecast panellists see economic growth decelerating in the second quarter
before gaining speed in the second half of the year. Growth for the full
year is seen at the same rate as last month. While this growth rate keeps
Peru in the top spot regarding economic growth compared to its regional
peers, it brings the series of significant upward revisions, which have
lasted through the past months, to an end.
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