Peru shows signs of economic recovery

Peru’s anti-government protests are subsiding, economic activity is picking up, destruction caused by heavy rains is being repaired, and inflation is falling.

Accumulated 12-month inflation reached 7.97% in April, the lowest level in the last 11 months, according to the central bank. While the figure is still above the 1-3% target range, it suggests inflation is coming down.

The mining sector grew 8.7% year-on-year in March. Copper production grew 19.9%, molybdenum 7.1%, iron ore 14% and gold 1%, according to statistics institute Inei.

Miners Cerro Verde, Las Bambas and Quellaveco also communicated promising Q1 results, as blockades ended and operations restarted. The companies will focus on reducing accumulated stock in the next months.

Electric power generation grew 8.6%, with thermoelectric generation registering a plus of 48.7%. Hydrocarbons production grew 12.7%, with output of oil increasing 50.4% and natural gas 15.3%.

Regarding construction, private works have not picked up yet. Cement consumption fell 15.3% in March and 15.6% in February. Although a rebound is expected, public investment and large projects currently sustain the sector.

Public investment grew 16% in April, with 10.7bn soles (US$2.88bn) having been executed in the first four months of the year, according to the economy and finance ministry (MEF).

The ministry said that local projects progressed for the first time in April, with execution reaching 1.4bn soles, up 31.7%, due to the start of new administrations and representatives.

Transport regulator Ositran reported that US$230mn in transport infrastructure was executed in Q1, up 38%, while US$122mn were invested in the port sector.

Infrastructure repairs after the heavy rains are underway, and a bill to create an infrastructure authority to streamline reconstruction is in congress.

Latest figures by the MEF suggest that public investment will grow 6% in Q2 due to bigger budgets for various entities. Private investment will recover more strongly in Q3, economy minister Alex Contreras said in a statement.