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Economy
develops above expectations in September
In September,
the economy expanded by 4.5% compared to the same month last year.
The reading was above market expectations, which had anticipated growth to
come in around 3.0% in the final month of the third quarter. The
September figure was well below the very strong 6.1% growth registered in
August, which had marked the fastest pace in more than a year.
According to seasonally adjusted data, the economy actually contracted
1.07% in September over the preceding month compared to a 1.25% expansion
in August.
Economy
accelerates in third quarter amid strong external sector
In the third quarter, the economy expanded by 4.8% over the same period
last year, which represented an acceleration compared to the 3.6% growth
recorded in the second quarter and exceeded last month’s Consensus
Forecast estimate of 4.2% owing to a surprisingly strong September and an
upward revision to August growth figures. The acceleration in the
third quarter was entirely due to the external sector, where export growth
more than tripled from 5.8% in the second quarter of this year to 17.8% in
the third, while imports slowed from 11.5% to 10.0%. Domestic
demand, in contrast, decelerated considerably, as growth receded from 4.4%
in the second quarter to 3.1% in the third. The slowdown in
investment and lower inventory growth accounted for the moderation in
domestic demand growth, as consumption actually picked up speed. Gross
fixed investment increased by 6.9% in the third quarter, following on 7.5%
growth in the second, amid lower private investment. Private
investment growth dropped from 11.7% growth in the second quarter to 6.5%
in the third. However, throughout the year the private investment
still has grown an accumulated 8.7%, reflecting strong investments of
mining and other companies associated to export activities.
Public investment, on the other hand, reverted from a 13.0% contraction in
the second quarter to a 9.0% expansion over the same quarter last year.
The strong third quarter reading reflected greater capital expenditures in
public works carried out by Foncodes and higher investments of by the
regional governments. Finally, greater central government
expenditures, mainly in transportation, provided an additional push to
public investment growth.
Consumption
remains stable as stronger public spending offsets slower private
consumption growth
Total consumption accelerated from the 2.8% pace observed in the second
quarter to 3.7% in the third, as private and public consumption gained
steam. In the third quarter, private consumption expanded 3.4% over
the same period last year, up from 2.8% in the second quarter. The
acceleration in private consumption reflected growing disposable national
income, increasing urban employment and surging consumption loans of the
financial system, which prompted a strong increase in consumer goods’
imports, sales of vehicles and department store sales. Stronger
private consumption was complemented by healthy public consumption growth,
which reached 6.5% annually in the third quarter, following on 2.9% growth
in the second.
Strong
fishing buttresses growth but fails to stimulate primary manufacturing
The fishing industry was the main sector behind the third quarter
acceleration, as it experienced the most notable improvement, with
activity accelerating from 26.0% growth in the second quarter to 33.7% in
the third. The sector profited from particularly strong anchovy
catch in July, amid favourable climatic conditions. Anchovies are
the most important species for the fishing sector, where they account for
almost half of total output. However, in contrast to the usual
pattern, primary manufacturing, which depends to a large extent on fishing
as a key input, did not profit from the surge in the fishing industry.
In the third quarter, manufacturing based on raw materials increased a
paltry 1.5% over the same period 2003, following on 6.8% annual growth in
the second quarter. However, non-primary manufacturing accelerated
from 5.9% in the second quarter to 7.1% in the third quarter and thus
compensated for the slump in primary manufacturing. As a result,
total manufacturing continued to expand at the same robust 6.1% observed
in the second quarter.
Mining
slumps amid weaker gold and zinc output in spite of resilient copper
Mining expanded a disappointing 1.5% over the third quarter last year, as
sluggish metal mining offset a solid expansion in fuel output. Fuels
profited from the ramp up of operations of Camisea’s Lot 88 operated by
Pluspetrol. As a result, natural gas production added 79.5% over the
same quarter last year which shifted the production of fuels from a 4.3%
contraction in the second quarter to a 12.7% expansion in the third.
Metal mining, in contrast, slowed from 3.1% growth in the second to 0.6%
growth in the third quarter, as lower output of gold and zinc offset
higher copper production.
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