Peru’s Economy Shrank 1.4% in July From Year Earlier

By Nathan Gill
Sept. 15 (Bloomberg) — Peru’s economy contracted for a second month as demand for the South American country’s fishing, manufacturing and metal exports fell.
Gross domestic product fell 1.4 percent in July from the same month a year earlier, after a 2.1 percent year-on-year decline in June, the government statistics agency said today. Economists expected GDP to shrink 0.8 percent, according to the median of 12 forecasts compiled by Bloomberg.
“Economic activity could be touching bottom, but there’s still an uncertain outlook,” Hugo Perea, the chief economist for Peru at BBVA Banco Continental, said today in a phone interview from Lima. “Stabilization still depends on whether global activity recovers.”
The government is tapping three years of fiscal surpluses to finance 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. These measures, coupled with a rebound in exports as the global economy recovers, will probably help Peru post growth in 2009, according to a Bloomberg survey of 10 economists.
Fishing output fell 11 percent in July, while manufacturing dropped 12.4 percent and metals output fell 1.9 percent, led by molybdenum, copper and zinc, the statistics agency said. Peru is the world’s largest silver producer and third-largest exporter of copper and zinc.
Agriculture rose for the first time since May, expanding 1.4 percent, the government said.
In a separate report, Peru’s jobless rate rose to 8.3 percent in August from 8.2 percent in July, the institute said. Economists expected an unemployment rate of 8.1 percent, according to the median of seven forecasts.

The sol strengthened 0.4 percent to 2.9095 per dollar at 3:15 p.m. New York time from 2.9220 yesterday.

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