Living in Peru : your everyday companion

Andina

Exports of Peru's Micro and Small Enterprises (MSE) are likely to grow by two percent next year, reported Juan Carlos Mathews, executive director of USAID Peru Mype Competitiva project funded by the United States Agency for International Development (USAID).

Since October 2008, MSEs have recorded a 24 percent fall in shipments, a negative trend that will continue until the end of 2009 due to the international financial crisis.

Mathews stated remittances have declined 18 percent, affecting MSEs since these shipments are invested in improving the competitiveness of such enterprises.

The impact of global crisis in this sector would be dramatic if the government did not take initiatives to promote state purchases from MSEs, he stated.

There are companies that have closed down, and others are getting further prepared to deal with the crisis, improve their performances next year and recover in 2011.

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Andina

Consumer prices in Lima fell more than expected in June, which should allow the Central Reserve Bank of Peru to continue to cut its reference interest rate, reported Dow Jones Newswires.

The consumer price index for Lima fell 0.34% in June from the previous month, the government's statistics agency said Wednesday. On a 12-month basis, the CPI rose 3.06% through June, it added.

Economists expect the CPI to soon fall to within the central bank's annual target range of between 1.0% and 3.0%, allowing it to ease monetary policy with the aim of boosting economic growth.

"The significant moderation of inflation pressures, converging inflation expectations, well-anchored currency and gradual deceleration of domestic demand generate a rather constructive outlook for inflation going forward and this should prompt the central bank to continue to ease monetary policy," Goldman Sach's Alberto Ramos said.

The central bank's reference rate reached a recent high of 6.5% late last year, as increases in the costs of imported fuel and food products lifted consumer prices.

Since then, the reference rate has fallen to 3.0%, and another reduction is expected when the central bank's board of directors hold its regularly scheduled monthly meeting on July 9.

"We expect the central bank to ease monetary policy further next week; we forecast a 50-basis-point rate cut to 2.5%, but do not rule out a larger rate cut. We expect the current easing cycle to end with the policy rate at around 2.0%," Ramos said.

Have other topics you'd like to see in our news section? If you or someone you know would like to contribute a news article to Living in Peru, whether it's translated or based on a personal investigation, send it to editor@livinginperu.com.

Andina

Peru's stock market indexes ended higher Wednesday, boosted by stronger mineral prices that lifted various mining companies.

The Lima Stock Exchange's broad general index ended 2.97% higher at 12,993.71. The selective blue-chip index ended 3.46% stronger at 21,355.95.

The mining subindex increased 2.93%.

Copper miner Southern Copper Corp. rose 1.2% to end at $20.04 on improving copper prices, while copper miner Sociedad Minera Cerro Verde gained 2.0% at end at $18.10.

Precious metals miner Compania de Minas Buenaventura increased 5.6% to end at 73.91 soles ($24.42) on stronger gold prices.

Zinc miner Compania Minera Volcan increased 6.4% to end at PEN2.51 as zinc prices gained.

Financial holding Credicorp, which owns Peru's largest bank, rose 1.1% to end at $57.00.

The sol ended slightly weaker at PEN3.026 to the U.S. dollar from PEN3.025 in the previous session. So far this year the sol has gained 3.51% against the greenback.

Have other topics you'd like to see in our news section? If you or someone you know would like to contribute a news article to Living in Peru, whether it's translated or based on a personal investigation, send it to editor@livinginperu.com.

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Isabel Guerra

The third round of free trade talks between South Korea and Peru is to be held in Seoul next week, the government said Wednesday.

During the third round of the talks, the two sides are planning to narrow differences of remaining issues from the previous negotiations, such as economic cooperation in service, investment, energy, minerals and fisheries, the foreign ministry said, Andina News Agency reports.

The free trade pact between South Korea and Peru (if reached) is expected to boost up bilateral economic ties. 

In 2008, the trade amount of South Korea and Peru topped US $1.62 billion dollars.

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Isabel Guerra

Peru's Government reiterated that it has no plans to intervene in the Doe Run mining company (one of the biggest mineral exporters in the country) in order to save it from financial collapse.

Thousands of workers from La Oroya smelter are currently holding a public protest, because they do want the governement to intervene so that they don't lose their jobs.

Their protest is disturbing not only the Central Road traffic (which is halted) but also the commercial activities, and the schools are not working either.

“An intervention would be very complicated in terms of responsibilities and financial consequences, because it is very likely that we would have to face international claims,” said Pedro Sanchez (Peru's Minister of Energy and Mining) to a local radio.

A few days before, Doe Run had announced that it would close operations during 90 days (during which workers would receive only 50% of their usual salaries).

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Isabel Guerra

According to Andina News Agency, Peruvian and Korean officials will meet tomorrow in Seoul to resume bilateral trade negotiations on rules of origin and related procedures, in order to review line by line the tariff subheadings to be included in the harmonized system of an FTA with that country.

A group of experts from Peru’s Ministry of Agriculture (Minag) will participate in this and other meetings of the 3rd Round of Negotiations for the Peru-South Korea trade deal, which will be held from June 29th to July 3rd.

“The signing of this FTA is one of the government’s goals as it will increase Peru's exports of agricultural products,” said Minag.

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Isabel Guerra

Peruvian Finance Minister Luis Carranza said Sunday that Peru will not face an economic recession, because the country expects high growth levels in the third and fourth quarters of 2009.

“Saying that Peru is facing a recession is not exact and it's not based in reality. The Gross Domestic Product (GDP) grew by 1.8% and it will keep on growing,” he said.

“That will allow us to reach an annual growth nearing 3%, and that's why we still keep the growth figures in 3.5%,” he said.

He pointed out that protests in Peruvian jungle may not affect GDP growth in 2009.

He added that the government's economic stimulus package (ESP) designed to face the international crisis is working and it is been applied with success.

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Isabel Guerra

Canadian International Trade Minister, Stockwell Day, announced today that the Peru-Canada FTA will come into effect on July 1st.

Peru-Canada FTA was signed in May last year, in addition to two agreements on Labor Cooperation and Environment, in order to promote bilateral practices and assistance.

Peruvian Foreing Trade Minister Mercedes Araoz said that this FTA is ready to come into force after being passed in the Canadian Lower House and Senate.

Day added that the agreement will open doors to very important sectors of the Canadian economy, such as mining, manufacturing, agriculture and financial services.

Thanks to Peru-Canada FTA, about 3,836 Peruvian products will enter the Canadian market with zero tariffs, according to Lima Chamber of Commerce (CCL).

In 2008, bilateral trade between Canada and Peru amounted almost US $ 2.5 billion dollars.

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