2012-11-14 21:02:56 - Peru Business Forecast Report Q3 2012 - a new country guide report on companiesandmarkets.com

Peruvian growth will be among the strongest in Latin America over the medium term on the back of a growing consumer base and robust mining and infrastructure project pipelines. Domestic demand will be a larger driver of growth going forward. Accordingly, the telecoms, utilities and financials sectors look set to outperform over the long term. We expect to see a moderate deterioration in Peru´s healthy fiscal accounts following the victory of left-wing Ollanta Humala in June´s presidential election, although the increase in expenditure is likely to be matched by increased revenue flows following the introduction of mining taxes.

Major Forecast Changes

We have modestly revised our 2012 current account deficit forecast to 1.7% of GDP from 1.2% of GDP previously. This

 

 

is underpinned by potential for softening demand for the country´s commodity exports from major markets such as China and the EU, while a strong domestic demand story and substantial investment will keep imports elevated. In addition, foreign companies´ profit repatriation will keep the income account balance anchored in the red. Furthermore, though strong financial account inflows will comfortably cover the current account shortfall, rising costs in the mining and infrastructure sectors underpin our view that the days of massive financial account surpluses are over for now.

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