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Moody's: Peru credit conditions to remain largely stable in 2019-20

00:03 | New York (U.S.), Aug. 9.

Credit conditions for non-financial companies in Peru (A3 stable) will remain largely stable through mid-to-late 2020, Moody's Investors Service has projected.

"We expect that public investment will likely recover more fully only in the second half of 2019, however," it expressed.

According to Moody's, Peru remains among the most stable economies in Latin America, with real GDP growing by 3.2% annually from 2014-18, modest inflation rate, and a local currency that has depreciated less than other currencies in the region.

Domestic demand staged a strong recovery in 2018, with 4.0% GDP growth marking a significant jump from 2.5% in 2017.

Likewise, private investment had expanded by 4.4% in real terms, and public investment by 6.8%, as the mining investment cycle restarted and fallout from the Odebrecht scandal receded. This expansion in investment served to reinvigorate private consumption, which bounced back to 3.8% growth after growing 2.7% in 2017.

Private investment in the mining sector will underpin Peru's investment growth in 2019, with several large projects now in the construction phase, supporting roughly 20% investment growth in that sector. Mining investment benefits other sectors, seeding economic activity in the construction, transportation, and manufacturing segments, all of which bolsters overall GDP growth.

Furthermore, increased public investment in 2020 will offset the likely deceleration in mining investment growth with a new potential pipeline of projects to be developed at the regional and local levels.

"The momentum of overall consumption, both public and private, will also increase, pushing real GDP growth to close to 4%," Moody's said.

Editor's note: Based on information provided by Moody's.

(END) NDP/DTK/MVB

Published: 8/9/2019

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Moody's: Peru credit conditions to remain largely stable in 2019-20

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