Peru no longer in pole position

02 August 2015

Far from being one of Latin America’s fastest growing economies, Peru this year is set to be eleventh in the league table of the region’s economies if the latest figures from the UN Economic Commission for Latin America and the Caribbean (ECLAC) are to be believed. Peru’s growth rate this year is put at 3.6%, way behind the fastest growing economies such as Panama (6%), Nicaragua and the Dominican Republic (both 4.8%) and Bolivia (4.5%). Latin America’s overall growth rate (0.5%) this year will be brought down poor results for Brazil, Argentina and Venezuela.

Many economists believe that the ECLAC estimate for Peru is over-optimistic. For instance, Pablo Secada from the Instituto Peruano de Economía (IPE), a private sector think-tank with very close ties to the Ministry of Economy and Finance (MEF), thinks that growth in 2015 will be no more than 2.6%, arguing that urgent measures are required to boost productivity. Meanwhile the El Niño phenomenon could also impact seriously on growth (see below).

Central Bank figures, published at the end of July, showed that GDP in Peru grew by an annualised rate of 2.1% in the first five months of 2014 when compared with the same five months a year earlier. One of the worst-affected sectors of the economy was the construction industry, normally considered as a bell-weather for the economy as a whole, which underwent a contraction of 8.6% over this period. Construction has been one of the fastest growing sectors in recent years, especially at the high-income end of the housing market.

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    The Peru Support Group exists to promote social inclusion, sustainable development and the observance of human rights in Peru. To that end the PSG highlights shortcomings in observance of established norms, whether international or local in nature, in its research, advocacy and publications. In so doing, it underscores the relationships that exist within the political system, how institutions work, and the effectiveness of policies that aim to reduce poverty and inequality within the context of sustainable development.

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