Peru Official Sees Exports Surging as China Passes U.S. to Be Top Market

Peru’s exports may rise to a record this year after China overtook the U.S. to become the Andean country’s top destination for sales abroad.

Chinese demand will help boost Peru’s exports 17 percent to $31.6 billion after last year’s 15 percent decline, Juan Carlos Mathews, export director at the government’s trade promotion agency Promperu, said in an interview in Lima yesterday. Exports may rise 9 percent next year, he said.

China overtook the U.S. as Peru’s top export destination for the first month on record in July, aided by a free-trade agreement signed in 2009, Mathews said. China accounted for 17 percent of Peru’s exports according to preliminary data for July, compared with 16.8 percent for the U.S., as the world’s second-largest economy increased purchases of fruit, fresh fish and wood products, Mathews said.

“We’ve found an alternative market at a time of global crisis,” Mathews said. “The Asian market has been one of the ways out.”

Rising sales of food products, fish and textiles will help compensate for a decline in metals prices during the remainder of this year and lead the increase in Peru’s exports next year, Mathews said. Metals represented 62 percent of exports in the first half of this year.

Copper Exports

Commodities led by copper will probably account for 75 percent of the Andean country’s overseas sales this year. That share may fall to 70 percent within three years as food and manufactured goods make up a greater percentage of exports, Mathews said.

Food exports may double to $4 billion within five years from about $2 billion projected for this year, he said.

The sol’s 3.4 percent appreciation this year isn’t a concern for the majority of exporters whose costs are primarily in dollars, he said. Exporters whose costs are mainly in soles, such as makers of jewelry, will be affected by the sol’s gains, Mathews said.

The strong local currency has reduced exporters’ revenue at a time when inflation is pushing up their production costs, exporter group Adex said today in an e-mailed statement.

“A falling dollar coupled with the increase in domestic prices represents a very damaging combination for exporters given that they face declining revenue and rising costs,” Adex said.

To contact the reporters on this story: John Quigley in Lima at jquigley8@bloomberg.net

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