Peruvian Economy Minister Luis Miguel Castilla is sworn in by President Ollanta Humala, on October 31, 2013. AFP/Getty Images
Even if Peru’s economy is holding up amid the changing global monetary cycle and an overall slowdown in emerging markets, the country is seeking ways to rebalance it. Peru grew 5.3% last year, above the 5% figure previously released by the government, and is projected to stay within that realm in the next two years. BBVA Research says growth in the Peruvian economy will accelerate to 5.6% in 2014 and 5.9% in 2015 (the government says it will reach 6%).
The reason for a new growth figure? A revised method of calculating gross domestic product that is more in tune with the country’s current situation — it replaces 1994 with 2007 as the base year for growth calculations — and its industrial strong points. Particularly the mining and hydrocarbons sector, which the new method re-weights to account for 14.4% of GDP, leaping up from 5% As a a global leader in the mining industry it makes sense that it’s gaining more presence (Peru is the third largest producer of copper and zinc in the world and also a major producer of gold , silver, among other minerals).
Peru’s steady growth in recent years has been largely driven by mineral production and the outlook seems to follow that trend: new mines and expansion projects are expected to more than double its copper production by 2016.
Peruvian Finance Minister Luis Miguel Castilla attended the inPeru roadshow in New York City on March 7, where he told the crowd that the country’s economic expansion will be fueled by a large public investment plan targeting infrastructure in such diverse sectors as energy, transport, health and education. In an interview with Latin Finance he went into details: “We have a series of important PPPs (Public-Private Partnerships) in the pipeline in different sectors – transportation, energy, hydrocarbons, ports, roads – that we’re in the middle of bidding.” He later added that over the next 18 months he expects Peru to bid at least $13 billion worth of projects in infrastructure. Ultimately it seems as if they intend to grow their economy by opening it up to give different sectors more importance while sustaining their mining drive.
However, some officials have hinted that the country wants to rebalance its economy away from mineral exports, which makes the new GDP method seem like its aimed incorrectly. Even if Peru is seen among the world’s fastest growing economies in 2014, diversification could ultimately prove an even bigger engine.
