Peru’s economy posted impressive numbers in March, exceeding the expectations of analysts and the government. Its economy grew by 2.68 percent, massively surpassing the forecasted growth of 2.15 percent.
The country’s GDP topped the predicted 1.5 percent increase by the government, and instead rose by 1.73 percent, with the mining sector contributing the most. To analysts’ surprise, the mining industry surged by 14.71 percent year-on-year amid lower commodity prices and labor problems. Copper and gold, especially, experienced a 10 percent output increase. Peru’s exports rely heavily on this segment.The country’s inflation rate trails behind with 3.02 percent, a tad higher than the Central Bank’s limit of 3 percent.
The financial service sector and the agriculture sector rose by 12. 11 percent and 1.16 percent, respectively. However, not all of Peru’s industries are on an upward trend. Energy production dived by 9.6 percent, and manufacturing output fell by 7.75 percent.
An infrastructure gap of $121 billion will be closed by a recently announced series of projects amounting to $113 billion. According to a research conducted by publishing agency Peru Top Publications (PTP), the projects, which will be funded by the central government, regional and local governments, and the private sector, will be completed in 2021.
“The implementation of these investment plans will reduce the infrastructure gap by over 93 percent, which will contribute, without a doubt, to the strengthening and growth of regional economies, taking into consideration that 85 percent of these projects will be implemented out of Lima,” Jose Lumbreras, PTP’s Project Development Manager, told the El Peruano newspaper.
Alonso Segura, Head of the Economy and Finance Ministry, said that there will be more investments in infrastructure than in mining as they “need to connect the country.” He added that it will have a significant effect on the national productive activities in 2016.
“We want all investments [to be carried out] in the country, whether in the extractive sectors or infrastructure. We are trying to attract more investments aimed at other sectors, those different than the traditional ones,” Segura said.
Currently, 19 Free Trade Agreements (FTAs) are in place and three more are under negotiations.
The government is also investing heavily in human capital, mainly to lower its high unemployment rate of 7.9 percent. An estimated 328,000 Peruvians slid down to join the middle class in 2014, according to the Inter-American Development Bank (IDB). By focusing on education, the government hopes that more people will gain better skills to land jobs.
“The key is to invest in human capital, since the only sustainable way for citizens to generate income throughout their work life is by having capacities,” Segura said.
“These government-implemented policies don’t generate immediate economic growth, but ensure potential GDP growth is increasing and becoming sustainable in the mid term.”