Weekly Report - 28 November 2013 (WR-13-47)

PERU| Peru’s economy slows. On November 26 the outgoing president of Peru’s central bank (BCRP), Julio Velarde Flores (see sidebar), described the strategy that the BCRP will pursue in coming months as falling between that of neutral and aggressive. Velarde’s comments come amid Peru’s continued economic slowdown, with GDP growth of 5.5% forecast for year end, down from 6.3% registered in 2012. Peru’s economic slowdown has been mainly attributed to external factors, such as a fall in metal prices in international markets and shrinking demand for raw material consumption in the US and China. Mining exports, which account for 60% of Peru’s exports, have contracted by 2.08% this year on official data while the local construction sector has also experienced a slowdown this year for the first time in two years. This suggests that not only is less money being pumped into the Peruvian economy but also that investor confidence may be on the wane. On the bright side, the slowdown is keeping inflation levels in check. Velarde pointed out that November’s monthly inflation rate will be -0.2% and projects a year-end rate of 3% - within the BCRP target range of 1%-3%.