Peru: One Of The Most Dynamic Economies In Latin America

Although we are expecting Peru’s economic growth to moderate over the coming years, due in large part to knock-on effects from a hard landing in China, we are forecasting 5.5% average real GDP expansion between 2012 and 2017, meaning that Peru will remain one of the most dynamic economies in Latin America.

This will come on the back of a burgeoning consumer growth story and a relatively strong investment outlook underpinned by the mining, infrastructure and oil and gas sectors.

On the consumer side, we highlight the potential for growth in the food and drink, autos and telecoms sectors, on the back of rising GDP per capita and increasing credit extension.

Although a slowdown in mining sector growth is likely to result in further capital expenditure cuts and some delays for related infrastructure projects, we believe Peru’s investment story remains relatively attractive. The Peruvian investment agency is looking to tender several infrastructure concessions over the next 12 months, which will give a good indication of investors’ assessments of the country’s political and business environment risks. In addition, we continue to see increasing interest in the freight and shipping and oil and gas sectors.

That said, our relatively constructive outlook is not without risks. We maintain our view that political risk is likely to remain elevated over the coming quarters due to security concerns, following an uptick in Shining Path activity in recent months, as well as continued social unrest stemming from environmental and wage concerns.

Further analysis of Peru’s economy and other Latin American economies is available to subscribers at Business Monitor Online.