Category: Peru

Peru’s economy grew 9.82% in October, year on year, according to INEI, the country’s national statistics institute. Growth was driven by manufacturing, which expanded 9.4%. Meanwhile, mining and hydrocarbons, normally the engine of growth in the local economy was down 8.6%, the third month in a row this sector has seen a drop in production. GDP for the first 10 months of the year was up by 7.67%.

As expected, Peru’s Central Bank held its benchmark interest rate at 4.50% Thursday. The Bank said it had decided to hold the rate unchanged due to the benign inflationary environment. Consumer prices fell last month by 0.28%, taking inflation for the 12 months through November to 1.54%, at the bottom end of the government target range. Meanwhile, economic activity – driven by domestic demand – grew 6.9% in October, said the Bank, taking growth for the first 10 months of the year through October to 7.4%.

Peru has decided to delay the closing of the tender process for its copper mine Michiquillay from mid-December until February 28 to give more time to prospective bidders to study documentation. The government, via its private investment promotion agency ProInversión, is looking for investment of between $300 million and $700 million. Michiquillay, located in Cajamarca, close to South America’s largest gold mine Yanacocha, has reserves of copper, gold and silver estimated at 544 million metric tonnes. Those who have shown an interest in bidding include Southern Copper Corp and Compañía de Minas Antamina.

Ratings agency Standard & Poor’s has raised its long-term foreign currency sovereign credit rating on Peru to BB+ from BB and its long-term local currency sovereign credit rating to BBB- from BB+. The outlook on the ratings was revised to stable from positive. S&P said the ratings action, which brings Peru’s long-term local currency rating into investment grade, reflected the country’s: “Greater signs of political stability, combined with a strong economic performance”. The ratings agency noted that “The combination of a favorable international environment and sound implementation of economic policies has led to a substantial reduction in the government’s main historic credit risk, in particular its fiscal and external vulnerabilities,” and pointed to the 20-year, fixed-rate sol-denominated bonds issued by the sovereign as a reflection of the stable inflationary environment in Peru.

Peru’s economy expanded 7.35% in September, year on year, following growth of 9.2% in August, according to the institute of national statistics and data (INEI). The September figures mean annual growth is up to 7.5%, from 7.4% in August. Continuing buoyant global commodities prices, in particular of silver and fishmeal, have helped to keep revenues up. Growth of 25.8% in the fishing sector helped drive expansion in September, while the construction sector remained robust, expanding 14.5%.

Energy provider Globeleq of the UK began construction of its $135 million Kallpa electricity plant in Chilca, Peru. The 504 MW plant, being built 63 kilometers south of the capital Lima, will use natural gas from the country’s Camisea reserves. Financing for the project has come from Citibank Peru and Banco de Crédito del Perú.

Ratings agency Moody’s Investors Service has improved is outlook on Peru’s Ba3 foreign-currency government bonds to positive from stable. The action was taken to reflect significant reductions in Peru’s external vulnerabilities, said the Agency. Moody’s highlighted the declining trend in the country’s external debt ratios and the fiscal restraint being applied by President Alan García’s new administration. However, the Agency also noted that although the government has taken steps to increase local-currency funding in the domestic market, “a latent credit vulnerability remains given the presence of a relatively high share of foreign currency denominated debt”.

Peru’s annual inflation slowed in October to 1.89%, from 2% in September, helped down by the decline in international oil prices. On a monthly basis, prices were up by 0.04%, versus 0.03% in September. The Bank is targeting annual inflation this year of between 1.5% and 3.5%. The Bank was expected to hold the benchmark interest rate steady at 4.5% at its meeting Thursday evening.

Telefonica del Peru, a subsidiary of Spain’s Telefonica, reported a 39.2 percent increase in profits in the third quarter to $36.2 million. The company, which controls the fixed line market and competes principally with America Movil in the mobile phone market, said the increase was a result of the purchase of a competitor, Telefonica Empresas Peru.

Peru’s GDP expanded by 9.2% in August, year on year, the second highest monthly growth this year according to the institute of national statistics and data (INEI). Construction showed the strongest climb during the month, up by 21.4%, followed by the agri-fisheries sector, which expanded by 11.6%. August’s growth figures were up from July, when the economy expanded by 9.04% and took the increase for the eight months through August to 7.25%. Annual expansion was 7.29%. Last year, Peru recorded growth of 6.5%; the target for economic expansion this year is 6.6%.