Peru's Recession Proof Economy is Booming
THE ECONOMIST -- Despite a global bust and slowing domestic growth, Peru's economy remains in good shape Peru had one of the best-performing economies in Latin America last year, with GDPgrowth of 9.8% (see chart above)—higher even than that of China (9%). Despite a severe global economic bust and sharply decelerating domestic growth, the Andean country is likely to remain, relatively speaking, a star performer in 2009.
Peru’s growth has exceeded that of most other countries in the region during the last seven years, driven by high global minerals prices and expanding output from the natural-resources sector, including from the huge Camisea natural-gas field. In 2008 only Uruguay’s spectacular rate of growth of 11% eclipsed that of Peru. Yet all economies have been slowing since the latter months of last year in response to deteriorating external conditions, a tightening of credit, and more cautious consumers and investors. Many will slip into recession this year. Peru will not be one of them.
Peru’s growth has exceeded that of most other countries in the region during the last seven years, driven by high global minerals prices and expanding output from the natural-resources sector, including from the huge Camisea natural-gas field. In 2008 only Uruguay’s spectacular rate of growth of 11% eclipsed that of Peru. Yet all economies have been slowing since the latter months of last year in response to deteriorating external conditions, a tightening of credit, and more cautious consumers and investors. Many will slip into recession this year. Peru will not be one of them.
4 Comments:
My friends from that region tell me the Chinese and Indian oil companies are destroying the environment and the quality of life at a frightful rate in order to maximize profits.
So what if the Peruvian and Ecudorans have to live in poverty filth for a couple of centuries?
People I know Lima say that Chinese and Indian oil companies are doing no such thing 'save the rustbelt' though the socialists and commies (your fellow travelers) are making those sorts of noises...
The economy though, well there are some problems in Peru with tax collections: Recaudación cae 10.7% en febrero
MEF studies to elevate the ISC for cigarettes and spirits, while Sunat trusts that the prices of minerals begin to appear.
The strong fall of 10,7% in the tributary collection during February gives an idea us with respect to which it will be the tendency of the coming months. As much it is so the minister of Economy and Finanzas, Luis Carranza, esteem that the fiscal deficit of the 2009 will be of 0,7%, although this will be financed with the savings of the last year, indicated.
“It will be a slight fall, but the important thing is that we are contemplating an increase of the public investment in 52%, with that we are going to compensate the growth under the deprived demand more”, explained.
They will raise rate of ISC
Against this background, Carranza added that the fall in the February collection already was contemplated, by the smaller collection of the Tax to the Rent (TO GO) because of the reduction in the price of the commodities.
“Nevertheless, we observed that the General Tax to Ventas (IGV) shows a positive tendency, like the Selective Tax to Consumo (ISC) and this will compensate the fall that presents/displays GOING”, argued the minister.
And indeed the one will be the ISC that allows to collect more resources to the State, because the MEF evaluates to increase their tax rate to products like the spirits and cigarettes.
“Permanently revisions to the ISC to different goods are realised, in the case of fuels it has left a revision recently, and soon we have others for the tobacco and spirits”, maintained.
In spite of it, it did not advance when they will conclude these revisions nor to how much will be increased the ISC.
EXPECTATIONS
But from the Sunat, the expectation is that in the next months the collection is made level before an improvement in the international price of metals since they observe that the market begins to recover and the demand will influence in the price of products.
“February is an atypical month and low, the published numbers are explained there, reason why that number will begin to make level itself just a little bit in the next months”, affirmed Manuel Velarde, head of the Sunat.
Nevertheless, for the tributarista Jorge Mannini, this position is too optimistic because so important results cannot be based on a random subject like the commodities. “The unique metal that raises is the gold whereas the other continue quoting to the loss”, it maintained.
Effect of the imports
1] For the tributarista Jorge Mannini, the numbers of the Sunat to the 2007, revealed that the internal IGV ascended to S/.13, 586 million and the IGV of imports to s. 11,620 million, whereas in the 2008 internal IGV it reached s. 15,752 million and the one of imports s. 15,835 million.
2] “If tomorrow they lower the imports due to the crisis would take place another great forado. One is due to aim to fight the high index of breach of payment of tributes and to review the exonerations to obtain more resources”, said....
Interesting dichotomy between two resource rich states. Peru and Venezuela. I wonder if Peruvians are having trouble finding affordable rice.
It is always good to be well informed before posting a biased comment. Just as an example, a Chineese company is closing operations in Peru as they can not affort the peruvian requisites for environmental protection. Peru is more an oil importer than producer unlike Ecuador. However, Peru has one of the biggest water supplies in the world generating electricity mainly with hydroelectric stations) as well as a very important natural gas supply (In fact there are some exports to be done to Mexico... I believe but not confirmed to supply the electric plants that will provide energy to California?)
I will not say Peru is heaven and in fact there is a long way still to translate the growth to services such as education, health, salary levels, etc to the low income population, but we can see definetly an improvement that we hope continues.
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