Peru’s economy slowed for a fifth straight quarter as flagging demand for the country’s exports and global market turmoil damped investment.
Gross domestic product grew 6.5 percent from the same period last year, compared with 6.6 percent in the second quarter, the government’s statistics agency said in an e-mailed report today. Five economists surveyed by Bloomberg had all forecast growth of 6.6 percent.
Weaker growth in Europe and the U.S. eroded demand for Peru’s textiles in the third quarter and cut prices for copper and gold, the country’s top exports. While household spending is “very strong,” central bank President Julio Velarde said Nov. 24, the government is stepping up spending on concern that external demand will deteriorate.
“Private investment will slow in part because of reduced optimism about the global economy,” said Pablo Nano, an economist at Scotiabank Peru, in a phone interview from Lima.
The government’s economic stimulus plan, which currently stands at 1.8 percent to 2 percent of GDP, will be made “as large as necessary” to maintain growth, Finance Minister Miguel Castilla said Nov. 11.
The plan will compensate for weaker private investment, which grew an annual 8.5 percent in the third quarter, down from 16 percent in the previous three months, the central bank said on Nov. 25.
Private consumption grew 6.3 percent in the third quarter from a year earlier, compared with 6.7 percent in the second quarter, as import and export growth slowed, the statistics agency said today.
The Peruvian sol gained 0.2 percent to 2.7085 soles per U.S. dollar at the close of trading today.
Private investment growth will recover as the government resolves social conflicts delaying mining investment and speeds up the process for awarding concessions for infrastructure projects, Castilla told reporters in Lima today following a meeting with Christine Lagarde, managing director of the International Monetary Fund.
Peru’s stimulus package is “appropriate” Lagarde said, citing the country’s fiscal surplus and “potential threats resulting from the global crisis.”