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Outlook
remains solid as Camisea project will bolster growth in second half
Consensus Forecast panellists remain upbeat about growth prospects.
With external demand thriving and the giant Camisea project to fuel the
growth in the second half of the year, the economy is seen as experiencing
yet another year of robust growth. In the second quarter, economic
activity is expected to have slowed to 3.6% from 4.6% in the first quarter.
However, in the second half of the year growth should resume to a 4.4%
pace. For the full year, GDP should grow by 4.2%, up 0.2 percentage
points 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 further in July
In July, consumer prices rose 0.19%. The reading was bang in line
with last month’s Consensus. At the same time, the reading was
significantly below the 0.56% price rise observed in June. Higher
prices for housing and electricity as well as transport and communication
accounted for the lion share of the monthly increase. On the other
hand, lower prices for clothes and shoes, furniture, recreation and
culture and for so-called other goods and services mitigated the price
increase. Despite the moderate price development in July, annual
headline inflation jumped from 4.3% in June to 4.6%, continuing the rapid
rise registered the month before. Just nine months ago, headline
inflation was 1.3%. Thus, inflation is steering well clear of the
Central Bank’s 2.5% target and is currently even well above 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 July, the core
inflation index was virtually unchanged (-0.01%) and annual core inflation
remained at 2.7%. Consensus Forecast participants have reflected the
recent price pressures by raising their forecast 0.3 percentage points
over last month to 2.9%, well above the Central Bank’s target but still
within the tolerance margin.
Fiscal
deficit shrivels in June amid strong tax take
In June, central government operations recorded an overall deficit of 179
million soles (US$ 51.5 million) compared to the 621 million soles (US$
178.6 million) deficit in June last year. The deficit narrowed due
to an increase in current revenue (+15.9% yoy in real terms), whereas
non-financial expenditures stayed virtually unchanged in real terms over
the same period. Revenues increased amid a significantly higher tax
take (income tax: +7% yoy, sales tax: +19% yoy), reflecting an increase in
the effective tax rate as well as the higher economic activity.
Owing to the favourable developments in tax revenues, some panelists have
lowered their projections for this year’s fiscal deficit. The
average nevertheless remains unchanged over last month at 1.6%, which is
slightly above the government’s fiscal deficit target of 1.4%.
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