18 September 2009

Peruvian Economy Has Reached ‘Point of Inflexion,’ Central Bank President Says

By Nathan Gill
Sept. 18 (Bloomberg) -- Peruvian central bank President Julio Velarde said the country’s economy has reached a “point of inflexion” after it shrank the most in eight years in June.

Rebounding demand in Peru and overseas will probably push the economy to 3.2 percent growth in the second half of 2009, and 1.8 percent growth for 2009 overall, Velarde said during a presentation at the central bank in Lima.

The government is implementing a $3 billion stimulus plan while the central bank has cut its benchmark lending rate to a record 1.25 percent to help revive demand in South America’s sixth-biggest economy.

Peru’s economy contracted 1.4 percent in July from the same month a year earlier, after a 2.1 percent year-on-year decline in June, as demand for the South American country’s fishing, manufacturing and metal exports fell, the government statistics agency said Sept 15.

Velarde said the bank forecasts that consumer prices will rise 0.4 percent to 0.5 percent in 2009, adding that he doesn’t see any short-term inflation risks in the $127 billion economy. Looking ahead, gross domestic product will expand 5 percent in 2010 and 5.2 percent in 2011, Velarde said.

Peru’s sol strengthened, climbing 0.3 percent to 2.8930 per dollar at 3:04 p.m. New York time. The currency has gained 8.4 percent against the dollar this year, the seventh-best performance in a basket of 26 emerging-market currencies tracked by Bloomberg.