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Outlook
remains robust
Consensus Forecast panellists remain upbeat that Peru will experience yet
another year of robust growth. In the second quarter, economic
growth is seen to slow to 3.4%. However, in the second half of the
year growth should resume to a 4.3% pace, as the impact of the Camisea
project will provide extra fuel to the Peruvian growth engine, resulting
in full-year growth of 3.9%. The year-end boost should also provide
a solid backdrop for robust growth next year, which is seen at 3.8% - a
notch above last month’s forecast.
Current
account deficit shrivels as trade surplus grows amid higher exports
In the first quarter, the current account balance incurred a deficit of
US$ 68 million. The figure was well below the US$ 128 million
observed in the final quarter and only a fraction of the US$ 514 million
in the first quarter last year. The improvement over the same period
last year was mainly due to an improvement in the trade balance, which
reversed a small deficit of US$ 18 million in the first quarter 2003 to a
sizeable US$ 559 million surplus. The high surplus reflected a
change in the terms of trade, which improved by 14.7% in annual terms.
In contrast, the income and service balances deteriorated over the
same period last year by US$ 180 million and US$ 12 million, respectively.
However, current transfers increased by US$ 60 million, mitigating the
impact and thus allowing for the higher current account surplus. The
financial account balance registered a surplus of US$ 271 million in the
first quarter, which was well below the US$ 1.0 billion surplus observed
in the same period last year. The deterioration was concentrated in
the public sector, which recorded net outflows of US$ 34 million compared
to US$ 597 million inflows in the first quarter 2003.
Consumer
prices increase in May
In May, consumer prices increased 0.35%. The reading was well above
last month’s Consensus, which had prices growing by 0.22% and also
exceeded the virtual price stability observed in April. Higher
prices for food and beverages accounted for the lion share of the price
increase mitigated by lower prices for recreation and culture as well as
in the category “other goods and services”. As a result of the
May price spike, annual headline inflation jumped from 2.8% in April to
3.2%. The Consensus believes that inflation will drop to 2.5% by the
end of the year, which is precisely in line with the Central Bank’s 2.5%
target.
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