MercoPress. South Atlantic News Agency

Peru tries to cool fastest growing regional economy

The Peruvian Central Bank raised on Thursday its benchmark interest rate to 6.5% from 6.25%, the latest of several measures to curb inflation. The announcement followed a release from the Ministry of Economy and Finance saying the economy had expanded in July at an estimated 8.9% boosted y by domestic demand and construction industry.

This however is lower than the 9.5% of July 2007 and last June 11.52%. During the first half of 2008, the Peruvian economy has been the fastest growing in Latinamerica, 10.3%. "The estimates from the leading indicators compiled by the Statistics Office, INEI, are showing the economy is expected to grow 8.9% in July, 11% in August and 9.9% in September, which would average over 9% for the twelve months of 2008". This compares with 8.9% last year the highest since 1994. According to INEI cement production and sales soared 15.6% in July pushed by a strong demand from the private sector as well as the public works budget, infrastructure, shopping malls and the government housing program. For the first eight months of this year, inflation in metropolitan Lima hit 4.7%, well above the Central Bank's annual target of 2%, plus or minus a tolerance band of one percentage The Peruvian government also announced Thursday the auctioning of 17 blocks for petroleum prospecting, which could involve some 800 million US dollars in exploration investments. Peru is actively encouraging foreign companies to invest in oil and gas projects in its quest to become energy self-sufficient. Including the 17 recently-auctioned tracks, Peru has now granted 104 energy contracts. Last year it auctioned 19 blocks, while it hopes to sign 24 contracts by the end of this year.