Living in Peru : your everyday companion

LivinginPeru.com
Isabel Guerra

Peru may have this year one of the lowest inflation rates in the world, and the lowest in Latin America and the Caribbean region; only 2%, according to an UN report, quoted by Semana Económica.

According to this report, called “Global situation and economic global perspectives for 2010” the country with the highest inflation rate will be Venezuela (28%), followed by Argentina (7%), Brazil (4.1%), Colombia (4%), Mexico (3.3%) and Chile (2.5%).

The figures come from official projections of UN Department of Economic and Social Affairs (Undesa).

Two factors explain this higher unemployment and lower domestic demand have reduced pressure on domestic prices, and falling commodity prices reduced cost-push pressures.

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LivinginPeru.com
Isabel Guerra

India is interested in strengthening its relationship with Peru, said today its Minister of State for External Affairs Shashi Tharoor.

“We have a strong commercial relationship that has been improving: several Indian companies are coming to invest in Peru, and our political relationship is excellent,”he said.

He also said, in the same press conference, that trade between both nations has been increasing in recent years, and as an example, he remembered that the turnover in 2008 reached US $784 million dollars; and during the first ten months of 2009 it reached US $302 million, but in as a consequence of the global economic crisis.

Tharoor avoided to give estimations on the volume of Indian investments, but he mentioned that the oil sector ones are expected to reach US $ 550 million within five years.

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Andina

Peru's GDP appears poised to grow the most in Latin America this year and maybe surprise on the upside, said  Moody's Investor Service on Wednesday.

According to the agency's preliminay estimates published in its report "Latin America Sovereign Outlook”, Peru is likely to post a 4.8 percent growth, which could even be higher, followed by Brazil with 4.7 percent.

"We expect a vigorous economic recovery, and Peru may be one of few countries in the region with GDP growth above 5% in 2010," said Gabriel Torres, Moody's vicepresident.

Last December, Moody's raised Peru’s foreign-currency government bond rating to Baa3 (investment grade) from Ba1 eliminating the rating gap between foreign- and local-currency government bond ratings.

Torres explaiend that the upgrade incorporated lower financial dollarization and an improved currency composition of government debt.

The decision also reflected indications of increased shock-absorption capacity and a track record of sustained economic growth.

The ability to implement counter-cyclical policies allowed the government to steer the economy towards a soft-landing in the face of adverse external conditions.

Enhanced fiscal flexibility was evident given fiscal savings accumulated during the 2006-2008 period of above-trend growth and the implementation of a counter-cyclical economic stimulus package.

Torres added that policy continuity will not be affected by Finance Minister Luis Carranza’s resignation at the end of 2009.

Moody's expects Latin America media GDP growth in 2010 of 2.5 percent.

It said that 2009 was a difficult year for Latin America and the Caribbean, as it was for much of the world, but the economic downturn was smaller than in other regions, such as Europe, and 2010 will see a return to growth for most countries.

"However, growth will not be as high as in the pre-crisis years, which is a challenge for Latin America given pressing social needs."

Given relatively low levels of economic development, the region’s ability to foster and maintain high levels of economic growth going forward will be key for continued ratings upgrades.

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LivinginPeru.com
Isabel Guerra

Peru became one of the four contries that registered a rise in their Foreign Direct Investments (FDI) during 2009, according to the United Nations Conference on Trade and Development (UNCTAD).

The report, quoted by Gestión, says that FDI in Peru rose from US $4.8 to US $6.2 billion dollars, which means an increase of 28.1%.

This way Peru becomes one of the four countries in the world, where this indicator increased last year; Peru is the only developing economy where FDI increased in 2009, along with Italy, Germany and Denmark.

In Latin America and the Caribbean, preliminary estimates point to a nearly 40.7% decrease from 144.4 billion dollars to 85.5 billion in 2009 of FDI inflows in 2009.

South America, Central America and the Caribbean had a decline in their FDIs in 2009, says the report, called “UNCTAD Global and Regional FDI Trends in 2009.”

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LivinginPeru.com
Isabel Guerra

Peru's economic growth may have been slightly higher than 5% by December 2009, said the President of the Central Reserve Bank (BCR), Julio Velarde.

He told the press that December's preliminary figure show that growth was more than five percent in that month, which would be enough to reach the projected growth of 1% for all that year.

Regarding the estimates for 2010, Velarde announced that the Peruvian economy will grow 5.5% or maybe even more.

On the other hand, the Peru's Central Bank intervened again in the foreign exchange market by buying US $ 258.5 million, positioning the exchange rate in S /. 2.855 per dollar.

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LivinginPeru.com
Isabel Guerra

About one-fifth of all workers in Peru are on a payroll, said Renan Quispe, Head of the National Institute of Informatic and Statistics (Inei).

Formal workforce adds up a total of 623,914 Peruvians, or 22.6% of total workforce, reported Inei, Peru's census agency.

According to the results of the 2008 Economic National Census, this means an increase compared to the previous census, done between 1993-1994, when the figures showed 1,031,695 permanent workers.

“Both figures represent an increment of regular employment at an annual rate of 7.3% between both census,” Quispe said.

The census also indicates that Lima region has 55.3% of the total working population, while Arequipa has 5.5% and La Libertad has 5.4%.

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Andina

In the last 14 years, 550,661 establishments for economic activity were created in Peru, according to the National Statistics Institute (INEI).

“In these years, an annual average growth of 6.5 percent has been registered, meaning that each year more than 39,000 establishments have been created”, indicated the Head of INEI Renan Quispe, during the exposition of the definite results of the IV Economic National Census, done in 2008.

At a department level, Lima is in first place with a registry of 370,390 establishments.

Quispe said that in the capital during the mentioned period, 217,000 establishments with an annual rate were created, similar to the national average.

However, Arequipa is still holding the second place with a registry of 60,900 establishments, with an increase of 134.3 percent and an annual average growing pace of 6.3 percent.

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LivinginPeru.com
Isabel Guerra

Unemployment rates in Lima rose slightly during the last quarter of 2009 compared to the same period in 2008, according to Peru's Statistics and Informatic Institute (Inei).

According to Inei figures, this is affecting mostly women, paradoxically in a context where Peru's economy seems to be taking off.

Inei press release states that unemployment in Lima rose to 7.9% of the Economically Active Population (PEA in Spanish), while the rate for the same period in 2008 was 7.8%.

The same report also indicates that, on the other hand, the PEA increased by 6.9% between October and December 2009 compared to the same period the previous year.

The annual unemployment rate reached 7.8% in 2009, but the Inei has not given any another previous figure to compare.

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Andina

Delegations of Peru and South Korea will held on Thursday at the Embassy of Peru in the United States an additional meeting in order to achieve a Free Trade Agreement (FTA), Peru's Ministry of Foreign Trade and Tourism (Mincetur) reported Wednesday.

During these meetings, both technical teams will discuss issues related to Market Access, Temporary Entry and Cooperation.

“All with the aim of laying the foundation to allow finishing the negotiations during the Fifth Round that will take place in the first quarter of the year,” he said.

He pointed out that Peruvian negotiators seek to guarantee that products of greatest interest of Peru, from agriculture and fisheries sectors, can join the Korean market in preferential conditions.

It should be noted that Peru’s President Alan Garcia and Peru's Minister for Foreign Trade Martin Perez paid an official visit to South Korea in November 2009, where they met with South Korean President Lee Myung-bak.

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