MercoPress. South Atlantic News Agency

Peruvian economy steaming ahead at 8%; top of the list in the region for business

Finance Minister Ismael Benavides

Finance Minister Ismael Benavides said Peru's economy should grow between 8% and 8.5% this year, with inflation ending the year from 2.2% to 2.5%. The Peruvian Central Bank latest forecast was annual growth of 7.5% to 8%.

“We have a stable economy; we have sustained growth, in the second quarter the economy expanded 10.2% and in the third quarter although we don’t have the final numbers for September, it was running above 9%” Benavides said in a speech at a business conference being held in southern Peru.

He said overall inflation will remain low despite some higher prices due to increases in international prices for commodities and revealed that the Peruvian government's aim is to have a floor growth above 7% in order to help reduce poverty levels.

Benavides said that the good prospects have been confirmed by the latest World Bank competitiveness report, “Doing Business” which has Peru ranked 36 in a list of 183 countries and first in South America.

“Without competitiveness there can’t be GDP expansion, that is why Peru wants to be more efficient and Peruvian companies must produce better so the country can keep growing”, added Benavides.

The Finance minister also referred to the large-sized bond placement made by Peru this week which lifted the county into the “major leagues in credit markets.”

Peru placed $1 billion in global bonds maturing on November 18, 2050, aiming in part to pre-finance a portion of the government's financing requirements for 2011. It also placed about $1.5 billion in sol-denominated bonds in the domestic market.

Benavides said Peru's external debt has declined to about 26% of GDP, adding the nation's investment grade rating from the major debt ratings agencies is “a treasury that has to be protected.”

Theresa Paiz Fredel, senior director at Fitch Ratings, said in a statement, “Even with a nominal increase in public indebtedness this year, Peru's public debt ratios will continue to decline and compare favorably to most 'BBB'-rated sovereigns, reflecting vigorous economic growth, currency strength and fiscal consolidation”.

Last month the IMF in its biannual report said the Peruvian economy would perform at 8.3% in 2010 compared to the previous April estimate of 6.3%.