peru economic&social outlook

8/8/2019 Peru Economic&Social Outlook

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PERU: ECONOMIC & SOCIALOUTLOOK

October 2010

Ministry of Economy and Finance


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Index

1. Economic Outlook

2. Social Progress

3. Challenges and prospects

2


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ECONOMIC OUTLOOK


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Peru overcame the global financial crisisrelatively unharmed, maintaining GDP growth,employment generation and poverty reduction

Key factors behind 2010 rebound: Confidence recovery Effective countercyclical monetary and fiscal policy High commodity prices

Sound balance sheets: Government, banks, firms andhouseholds

4


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Peru: Better performance than its peers

5

Latin-American GDP(Seasonally adjusted index Q4-07=100)

Source: Central Banks and National Bureaus of Statistics

90

95

100

105

110

115

Q4 07 Q2 08 Q4 08 Q2 09 Q4 09 Q2 10

Colombia

Chile

Brazil

Peru

Mexico


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Growth back to pre crisis levels

Source: National Bureau of Statistics, Central Bank of Peru.

Quarterly GDP Growth(Annual % change)

Seasonally Adjusted GDP andDomestic Demand

(Index 1994 = 100)

6

164

173

182

191

200

209

218

J-07 M-07 S-07 J-08 M-08 S-08 J-09 M-09 S-09 J-10 M-10

Domestic DemandGDP

Jul-10

10.3

11.710.9

6.5

1.9

-1.2-0.6

3.4

6.1

10.1

-2

0

2

4

6

8

10

12

Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10


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Private investment returns as the main driverof growth

Private Investment(Annual % change)

Capital goods imports($ million, 3M moving average)

Source : APOYO,Central Bank of Peru.7

Business confidence(%)

1/ Percentage of entrepreneurs who plan to accelerate their investment projects in the next 6 months.

20.1

34.1

28.1

21.3

1.8

-20.8 -22.0

-16.7

11.5

24.6

-25

-15

-5

5

15

25

35

45

Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10

500

550

600

650

700

750

800

850

900

950

J -08 M-08 S-08 J -09 M-09 S-09 J-10 M-10Jul-10

-30

-20

-10

0

10

20

30

40

0

10

20

30

40

50

60

70

Q1-07 Q3-07 Q1-08 Q3-08 Q1-09 Q3-09 Q1-10 Q3-10 Q1-11

ConfidencePrivate Investment (Annual % change, Right Axis)


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Countercyclical fiscal policy

Overall Balance of the Non-FinancialPublic Sector

(% of GDP)

Source: Ministry of Economy and Finance.9

-2

-1

0

1

2

3

4

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


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1/. Figure for 2011 corresponds to preliminary data.

Source: Ministry of Economy and Finance.

Participation of Debt Service 1/

(% of Public Budget)

10

Latin America: Public Debt 2009(% of GDP)63.5

41.2

28.1 26.6

6.8

0

10

20

30

40

50

60

70

Brazil Colombia Mexico Peru Chile

Median Baa3countries: 38.7

(Baa3) (Baa1)(Ba1) (Baa3) (A1)

2009 Foreign Exchange Reserves(% of GDP)

26.1

15.7 15.5

11.3 11.1

0

5

10

15

20

25

30

Peru Brazil Chile Mexico Colombia

Favorable financial indicators

26.3

18.6

12.8

11.2

6

9

12

15

18

21

24

27

2005 2007 2009 2011


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Investment as % of GDP reaching the highestlevel in 30 years

Public and Private Investment(% GDP)

Source: Central Bank Of Peru, Ministry of Economy and Finance. 12

Average

10

14

18

22

26

30

88-92 93-97 98-02 03-07 2008 2009 2010 2011 2012 2013

Public Investment

Private Investment

P i h l f i i


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Peru in the select group of emerging countriesgrowing at least 6% during 2010-2013

World GDP 2010-2013(Average annual % change)

13Source: IMF-WEO Abril 2010


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SOCIAL PROGRESS


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15

Average GDP per capita 1950-2009(1994 Nuevos Soles)

Source: BCRP

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

1950 1957 1964 1971 1978 1985 1992 1999 2006

3 years moving average5 years moving average

2009

GDP per capita: Upward trend since 1992


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Sustained reduction of poverty and inequality

Source: Bureau of National Statistics,

Economic Commission for LatinAmerican and the Caribbean.

National Poverty Rate(% of population)

Inequality in America 2003-2008(Gini Index)

Inequality(Gini Index)

0.54

0.47

0.42

0.44

0.46

0.48

0.50

0.52

0.54

0.56

2003 2009

46.4

46.1

51.652.6

54.854.3

52.0

48.648.7

44.5

39.336.2

34.8

30

35

40

45

50

55

60

1997 1999 2001 2003 2005 2007 2009

0.40

0.45

0.50

0.55

0.60

U

ruguay

Cos

taRica

Peru

ElS

alva

dor

E

cua

dor

Mex

ico

La

tinA

merica

Ar

gen

tina

Chile

P

anama

Pa

raguay

Nic

aragua

Dom.R

epu

blic

Bo

liv

ia

Ho

nduras

Co

lom

bia

Gua

tema

la

Braz

il

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Middle Class Boost: sectors D and E fell 11 pp.

2004 2010

Source: Apoyo.1/ Metropolitan Lima

Household Structure by Socio Economic Levels1

17

19.4

35.1

28.7

14.1

2.7

13.8

30.2

33.1

17.7

5.2


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Pro-poor and Decentralized Growth

Average Monthly Income by Household(Current Nuevos Soles)

By RegionBy Quintile

0 1,000 2,000 3,000 4,000 5,000 6,000

Quintile 1

Quintile 2

Quintile 3

National

Quintile 4

Quintile 5

2009

2003

18%

57%

38%

58%

67%

84%

0 1,000 2,000 3,000 4,000 5,000

Mountains

Jungle

Coast

National

M. Lima

2009

2003

19%

38%

45%

84%

61%

Source: National Bureau of Statistics, Ministry of Labor.18


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Poverty Level12345

Bank OfficesMFI Offices

1/. Updated to July 2010

Source: SBS / INEI

2001 2010 1/

Expansion of micro-financial institutions

Banks 822MFI 250

N Offices

Banks 1,467MFI 1,156

N Offices

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Short term priorities

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Economic policy continuity

Sustain high rates of economic growth

Continue with poverty reduction

Enhance competitiveness

Maintain a prudent fiscal policy framework andconsolidate macro prudential framework

Manage adequately capital inflows, mitigatingexchange rate volatility

Ensure a smooth democratic political transition


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Perus prospects are positive due,mainly, to policy continuity during the

past two decades and favorableexternal conditions. The main

challenge going forward is to sustainhigh growth with social inclusion

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PERU: ECONOMIC & SOCIALOUTLOOK

October 2010

Ministry of Economy and Finance

peru economic&social outlook

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