Peru's GDP to grow 4% through April on rising mining output

Peru's economic growth, which slowed in January, will accelerate in the first four months of the year as new copper projects ramp up output and central and regional governments boost public spending on infrastructure, Canada's Scotiabank reported.

The economy grew an estimated 5% in February, which this year had 29 days, according to the bank. GDP growth reached 3.4% in January compared with 6.4% in December, as the metals refining, steel and construction industries contracted, partly offsetting growth in mining, electricity, fishing, banking and telecommunications.

Copper will drive mining industry growth as Freeport-McMoRan completes a US$4.6bn expansion of its Cerro Verde mine and China Minmetals ramps up output at its recently completed US$8.3bn Las Bambas mine, the bank said.

February preliminary indicators point to 16.4% growth in electricity production, a 2.1% rise in cement deliveries and a 22% increase in public spending, according to the bank.

"We expect a significant rebound in GDP in February due to rising mining production, the recovery of the construction sector and a statistical effect of the leap year," Scotiabank Perú analyst Pablo Nano wrote in a report. "Mining production probably rose 30% thanks to greater copper extraction."

Growth may slow in March, however, as Easter Week (celebrated in April in 2015) cuts two working days compared with March last year, Nano said, although April results will benefit from the comparison, probably posting 5% growth, he said.

EL NIÑO

The El Niño phenomenon, which has caused flooding and landslides in northern and central Peru and drought in the south, has had less of an impact on economic growth due to investment in emergency infrastructure, according to the national statistics institute (INEI).

Both fishing and agriculture, which were bracing for extreme weather conditions, posted growth in January, according to the agency.

The government invested 3bn soles (US$900mn) in canals, drainage and river dredging last year and has budgeted an additional 1bn soles this year, said INEI director Aníbal Sánchez. The government has also lined up 3bn soles in emergency funding for 2016, he added.

The World Meteorological Organization last year predicted the phenomenon would be one of the strongest on record. The finance ministry estimated that a powerful El Niño could slash up to 1.5 percentage points from GDP growth in 2016, projected at 4%, while insurance industry group Apeseg estimated the potential damage at US$3.7bn.

El Niño, which affected 41 countries in 1998, caused US$1.8bn in damage in Peru alone.

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