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Construction
slows as Camisea-related works are drawing to an end
With the
exception of agriculture and the related primary industries all other
sectors grew in April over the same month last year. However,
construction experienced a significant drop from the exuberant 9.8% growth
recorded in March. The slower expansion of 2.4% is due to the end of
construction works related to the Camisea project in Pisco.
Outlook
remains robust
Consensus Forecast panellists remain upbeat about growth prospects.
The economy is seen as experiencing yet another year of robust growth.
In the second quarter, economic activity is expected to have slowed to
3.1% from 4.6% in the first quarter. However, in the second half of
the year growth should resume to a 4.4% pace, as the Camisea project will
fuel the growth engine. For the full year, GDP should grow by 4.0%,
up a notch from last month’s forecast. The second-half boost
should also provide a solid backdrop for continued robust growth next year,
which is anticipated to reach 3.8%.
Inflation
spikes in June
In June, consumer prices rose 0.56%. The reading was well above last
month’s Consensus, which had prices increasing by 0.26% and also
exceeded the 0.35% price rise observed in May. Higher prices for
food and beverages accounted for the lion share of the monthly increase
and were mitigated only by lower prices for so-called other goods and
services and virtual price stability in recreation and culture. As a
result of the June reading, annual headline inflation jumped from 3.2% in
May to 4.3%, continuing the rapid rise registered the month before.
Just six months ago, headline inflation was 1.3%. Thus, inflation
has steered well clear of the Central Bank’s 2.5% target and is
currently even beyond the 1% tolerance margin. However, core
inflation, which excludes the erratic effects of volatile categories such
as fresh fruits and vegetables as well as fuels, is developing more
favourably. In June, the price index of core inflation increased by
only 0.22% and annual core inflation increased just 0.2 percentage points
over the prior month to 2.7%. Consensus Forecast participants expect
inflation to return to the path suggested by underlying inflation and
anticipate headline inflation to drop to 2.6% by the end of the year,
which is just a notch above the Central Bank’s target.
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