Peru Growth Quickens in First Quarter on Metal-Led Rebound

Updated on

Peru’s economic growth accelerated in the first quarter for the first time since 2013, led by a recovery in metal output.

Gross domestic product rose 1.7 percent from the same period a year earlier, the country’s statistics agency said in a report posted on its website, matching the median estimate of analysts surveyed by Bloomberg. Growth accelerated from 1 percent in the fourth quarter, the slowest pace in five years.

Peru’s raw material industries led by mining and fishing are recovering after posting their biggest contraction in two decades last year. The recovery has been muted by a slump in the sol and falling metals prices, which have damped domestic spending, said Alfredo Thorne, who runs investment advisory firm Thorne & Associates.

“The impact of the weaker currency has definitely had an impact on household spending” by pushing up the cost of imported goods, Thorne said by phone from Lima.

Peru’s sol climbed 0.1 percent to 3.152 per U.S. dollar at the close of trading, after falling to a six-year low on Tuesday.

Thorne cut his growth forecast for this year to 3 percent from 3.5 percent after public works spending fell 17 percent in the first four months of the year and a central bank survey showed companies last month remained pessimistic about the economic outlook. The government’s 4 percent forecast is “very optimistic,” Thorne said.

Economic activity rose 2.68 percent in March compared with the year-ago period, the fastest pace in 11 months, the statistics agency said last week. The median estimate of analysts in a Bloomberg survey was for a 2.3 percent increase.

Finance Minister Alonso Segura last month announced a new round of stimulus to boost domestic demand after increasing spending and cutting taxes.

Peru’s central bank kept its key lending rate unchanged for a fourth month last week as inflation held at the top of policy makers’ target range amid a slump in the sol.