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Peru’s Economy Expands at Slowest Pace in Almost Five Years

Peru’s Economy Expands at Slowest Pace in Almost Five Years

Posted by Juan Gavasa on August 25, 2014

Gross domestic product rose 1.7 percent from a year ago, down from a revised 5.1 percent in the first quarter, the national statistics agency said in a report on its website today. The increase was in line with the median estimate of 13 economists surveyed by Bloomberg. GDP didn’t grow from the previous three months on a seasonally adjusted basis.

Peru’s central bank cut borrowing costs last month for the first time this year as the government expanded fiscal stimulus to revive South America’s fastest growing economy of the past decade. Growth is rebounding after the “transitory shock” of lower-than-expected copper, zinc and fishmeal output, Finance Minister Miguel Castilla said Aug. 14.

The central bank last week lowered its 2014 GDP forecast to 4 percent from 4.4 percent a month earlier, and an April projection of 5.5 percent. The bank and the Finance Ministry forecast 6 percent growth for next year.

Peru’s sol was little changed at 2.834 per U.S. dollar at 12:46 p.m. in Lima. The currency fell to a four-year low on Aug. 22.

Fixed asset investment slid 3.2 percent in the second quarter from a year earlier, the first decline since the last three months of 2009 when the country was emerging from a recession, the statistics agency said. Investment in construction declined 0.4 percent, while spending on machinery dropped 6.6 percent.

Exports fell to their lowest level in four years in the second quarter on lower copper prices and a government crackdown on illegal gold mining. Peru is the third largest producer of copper and zinc and the fifth largest for gold.

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