Posts Tagged ‘economic crisis’
As we expect news on the American Economic Stimulus Package in the next two weeks, Reuters writes about the status of the Peruvian’s stimulus package which will help Peru ride best the global economic recession with government estimates reaching up to 4-5% GDP growth in 2009.
The Reuters article reads:
Peru started the first part of spending under its economic stimulus package (…).
The first bit includes 4.5 billion soles ($1.42 billion) of price cuts and spending. It includes a 10 percent reduction in fuel prices, 3 billion soles in social spending, help for non-traditional exporters, and infrastructure projects.
The finance ministry said it also has been working to keep credit lines open and obtain loans from multilateral agencies.
As the local newspaper El Comercio reports, Peru and China are expected to finalize and sign a Free Trade Agreement on March 2009, and should become effective the second half of 2009.
This FTA should be the second most important agreement for Peru following the one signed with the U.S. which is already bringing mutual benefits particularly as a way to fight against the current economic crisis.
China and Peru would agree to a goal of zero tariffs on 90 percent of all goods traded between the two countries, including for example electronics, home appliances, machinery, vehicle motors, chemical, vegetables and fruits by China, and fish flour, mining, fruits by Peru.
Click here to read a Wall Street Journal article title “China’s Latin American Tango”.
Additionally, an FTA between Peru and Canada is also in the works and pending approval, as El Comercio also reports.
Great Article in The Economist: Preparing For Tougher Times; Credit Suisse Conservative 4.5 Percent GDP Growth in Peru
This is the title of a great article in today’s Economist print and online issues that provides an economic overview and outlook of Latin American countries, including Peru, and puts the region’s economy in perspective as it rides the U.S. and global economic crisis. The article begins saying:
In the five years from 2004 Latin America’s economies grew at an annual average rate of over 5%, inflation remained generally low, credit expanded and exports boomed. All this meant that the proportion of people living in poverty fell from 44% in 2002 to 33% this year, according to an estimate this week by the United Nations Economic Commission for Latin America and the Caribbean. Now the task facing the region’s policymakers is to limit the damage as the world economy deflates.
- GDP estimates in 2009: Brazil 4%, Mexico 0.4%. And as mentioned in my earlier post, Peru is expecting to grow at least 6% according to government estimates.
- The two main factors contributing to Latin America’s downturn are: a) Continuing steep fall in commodity prices because of worries that China’s economy is stalling. Commodities, from Venezuelan oil to Peruvian minerals, Argentine soya and Brazilian iron ore and orange juice, make up a big chunk of the region’s exports; and b) Banks in Latin America have turned cautious. Many foreign banks are cancelling credit lines to the region, or renewing them for shorter periods or at higher rates.
Additionally, Credit Suisse just released a report for Latin America, where Peru is slated to show the highest growth in the region, although takes a conservative 4.5% GDP growth, as Bloomberg reports.
I don’t typically write about economic-related news but more on fun and useful information about Peru. But I think it is worth mentioning how Peru is actually riding the US economic crisis.
As I mentioned in my November post, Peru is one of the few countries in Latin America that will be able to ride the crisis better than others with estimates of 9 percent in 2008 and 6.5 percent in 2009. In fact, the first statistics showing a downturn include:
- Copper and minerals prices are tumbling, thus exports fell in October for the first time in more than six years and down 11.4 percent from the same month last year.
- In September, Peru registered a trade deficit for the first time in more than five years, followed by a US$ 506 million shortfall in October.
As a result, the Peruvian government today announced a US$ 13 billion stimulus package for housing, highways and other projects in 2009, as Reuters reports today.
Peru’s economy is said to be one of the countries in Latin America that will handle best the U.S. economic crisis given its economic and political stability.
Bloomberg reports that Peru’s National Statistics Institute released the country’s GDP to have “expanded more than economists expected in the third quarter”. Construction and investment in heavy machinery and equipment led this growth.