Peru is one of the best performing economies in Latin America and is projected to progressively recover to an average rate of 4% between 2016 and 2017, after growing at a similar rate to that of 2014 this year, the World Bank said.
The Country Partnership Strategy between Peru and the World Bank focuses on supporting national priorities and improving equity through social services, infrastructure and competitiveness.
Over the past decade, Peru has been one of the fastest-growing economies in the Latin America and the Caribbean region.
“Between 2005 and 2014, the average growth rate was 6.1% in a context of low inflation (2.9%, on average),” the document reads.
High Growth and Low Inflation
The WB reports that a favorable external environment, prudent macroeconomic policies and structural reforms in different areas combined to create a scenario of high growth and low inflation.
However, the country has now entered a more challenging period since growth slowed in 2014 as a result of adverse external conditions, a corresponding decline in domestic confidence and fewer investments.
Also, adverse weather conditions affected the fishing industry and the implementation of the public investment program.
Consequently, gross domestic investment and exports declined by 4.8% and 1%, respectively, in real terms.
Growth Rate Remained Positive
Nevertheless, the 2014 GDP growth rate remained above the regional average (2.4% versus 0.8%) and inflation was only slightly above the target rate for the year (3.2%).
“In 2015, growth in Peru is expected to be similar to that of 2014. The country should progressively recover to an average rate of 4% in 2016-2017,” it predicted.
Mining Megaprojects
In this context, it foresees the production stage of large mining projects in two or three years will support aggregate demand.
“Large mining projects are expected to begin in the next two or three years. Additionally, the country will implement a countercyclical fiscal policy to support aggregate demand and the ongoing application of structural reforms will assure the continued confidence of private investors,” it stated.
(END) JJN/JJN/RMB/MVB
Published: 9/30/2015