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Contraction
in fishing industry sends primary manufacturing in a nosedive
The fishing industry once again followed its erratic growth pattern and
reverted from the strong 12.0% expansion observed in January this year to
a 6.9% contraction in February. The sector frequently experiences
these types of erratic shifts in activity, following sudden climatic
changes and government-induced fishing bans. Primary manufacturing,
which depends to a large extent on fishing as a key input, was also
affected from the slump of the fishing industry. In February,
manufacturing based on raw materials contracted 4.7% over February 2003,
in contrast to a 5.7% expansion the previous month. Growth of
non-primary manufacturing, on the other hand, accelerated over January.
The 3.7% annual growth observed in February was 1.5 percentage points
above the rate registered the prior month. Higher intermediate goods
production (February: +2.4% yoy; January: -2.1% yoy) prompted the
acceleration in non-primary manufacturing. Consumer goods production,
on the other hand, slowed slightly (February: +5.5% yoy; January: +5.7%
yoy) and capital goods experienced a more pronounced contraction in output
(February: -32.9% yoy; January: -7.9% yoy). In sum, the acceleration
of non-primary manufacturing was not sufficient to compensate for the
slowdown in primary manufacturing and, as a result, total manufacturing
activity growth slowed from 2.8% in January to 2.2% in February.
With the
exception of fishing and the closely related primary manufacturing
industry all other sectors grew in February compared to the same month
last year. Electricity and water constituted the second fastest
growing sector with a 6.5% expansion, more than double the 3.1% growth
recorded in January, owing to very strong growth in thermal energy.
Construction added 4.8%, which actually represented a slowdown compared to
the 7.5% growth rate observed in January.
Positive
outlook maintained
The outlook for 2004 remains healthy. Next to favourable prices for
key export commodities, the economy will profit from the ramp up of the
giant Camisea gas project, which should begin to contribute positively to
economic activity in the second half of the year. This is also
reflected in the estimate of Consensus Forecast panellists, who anticipate
economic growth to accelerate from 3.7% growth in the first half to 4.6%
in the second half of 2004. Full-year growth is seen at 3.9%,
unchanged from last month. Barring further negative surprises on the
political front, particularly in light of the record low 8% approval
rating of President Toledo, the economy should remain on the robust growth
trajectory in the coming year. Currently, Consensus Forecast
panellists expect GDP to expand 3.7% in 2005, which is also unchanged from
last month’s forecast.
Consumer
prices drop in April
In April, consumer prices remained virtually unchanged (-0.02%). The
reading was well below last month’s Consensus, which had prices growing
by 0.29% but remained well short of the 0.46% price increase registered in
March. Lower prices for food and beverages, recreation and culture
as well as in the category “other goods and services” compensated for
higher prices in the other categories surveyed by INEI, in particular
housing, fuels and electricity. As a result of the virtual
price stability observed in the fourth month of the year, annual headline
inflation remained unchanged at 2.8%. The Consensus believes that
inflation will drop to 2.5% by the end of the year, precisely in line with
the Central Bank’s 2.5% target.
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