The Peruvian Economy Improves Faster Than Expected

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The Peruvian Economy Improves Faster Than Expected

Peru economy for 2017

Peru economy for 2017

Julio Velarde, President of the Central Bank of Reserve, BCR, highlighted in a conversation with specialized media that the Peruvian economy is improving faster than expected. Nevertheless, the hope of another adjustment of a short-term reference rate before the closing of the year has increased for analysts and experts of the region’s economy after the low inflation rate.

The variation of the price index to the consumer, IPC, in the region’s economy decreased -0,47% in interannual October, according to the official information released by the Peruvian Government. It is the fifth measurement of the price system under zero refusals along the year.

Most of the analysts, according to Velarde, wait for an adjustment to the loss of the rate; even more with the negative inflationary indicator according to the maximum Peruvian monetary authority. But now with this negative number of -0,47% taking the inflation to 2.0%, perhaps that percentage of experts who hoped for the rate to drop could go higher, he added.

According to what the Reuters agency informed, the BCR has other two programmed meetings of monetary policy for this year, the first one being next week. According to the financial information service of the agency, the inflation is projected to be around 2.0% both this year and the next, but it could drop up to a 1.0% near April due to the comparative effect of the floods.

 Peruvian Central Reserve Bank (El Banco Central de Reserva del Perú)

Peruvian Central Reserve Bank (El Banco Central de Reserva del Perú)

BCR and Velarde are looking forward to what the statistical authority points out

I do not know what’s going to spend next week with the inflation indicators. We completely depend on the data, expressed Velarde in his conversation with the media regarding the numbers that the local statistical authority, or INEI, will share in the next few days.

With the previous reductions, we almost made the market think we would probably trim the interest rate the next month. It hasn’t been the case in the last communication, he finished.

Thomson Reuters service comments that though the inflation can be low due to the effects of the austral last summer floods, where the price system had a small rally, the growth is recovering very well, especially with the prices of copper now near three-year maximums. Peru is the second biggest world-wide metal producer.

Velarde expressed that the internal demand has been growing by over 8.0%, construction in almost 9.0% in September and mining investment has increased more than 25.0% in the last two months. According to the governor, there’s a recovery rate in V shape.

The BCR estimates a growth in terms of the real GDP of 3.7% for the last trimester of 2017. By the closing of the current year, the advance of the product or Aggregated income would have, according to official estimations, a projection of 2.80%. For 2018, the considered is, according to the government, around 4.0%.

The growth of the GDP for 2018 of 4.20% is perfectly attainable, finished Velarde after indicating that investment banks point out an increase of 4.4%.

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