Peru’s economic growth faces several obstacles such as the El Niño Phenomenon, and the suspension of infrastructure projects. Previous
projections for main indicators had to be downgraded, and GDP is now expected to be 3.5% for year-end 2016 (compared with the 4.3% projected in Dec’16). According to the Ministry of Economy and Finance, GDP growth for the first quarter is expected grow at 2.0%, while February’s expectations are higher at 2.75%. March results will be highly impacted by El Niño, and should push the rate back down. The National Institute of Statistics and Informatics shows the sectors that had a positive impact on GDP in January and February were : Fisheries (+ 38.13%), Telecommunications and other information services (+ 9.25%), and Mining and Hydrocarbons (+ 7.92%), while Construction (-6.11%) and Financial and Insurance (- 0.28%) dragged it down a bit.
The CPI increase for January was 0.24%, while February’s increase was 0.32% and March experienced the highest monthly variation in 19 years at 1.30%. This month’s increased rate was due to the change in food and non-alcoholic beverages (2.85%) and education (3.74%), both of which experienced a monthly variation higher than the average. It is possible that inflation may drop once the flood season caused by El Niño phenomenon, and the risks associated with it, has passed – probably in May, according to the latest guidance provided by Peru’s meteorological agency.
The exchange rate was 3.24 nuevos soles per US dollar for 2017Q1, according to the National Superintendence of Tax Administration. This figure has been steadily declining since the beginning of the year, when it started at an exchange rate of 3.34 nuevos soles per US dollar.
Source : Cushman & Wakefield