Peru's economy will grow by 6.5 percent annually the next five years, President Alan Garcia says.
BY JOACHIM BAMRUD
LIMA – Peru’s economy will see an average growth rate of 6.5 percent the next five years, President Alan Garcia told a group of business executives here.
“During the next five years we can easily have growth of 6.5 percent annually,” he told the Business Future of the Americas conference Monday. The event, which gathers more than 400 executives, is organized by the American Chamber of Commerce in Peru and forms part of the mid-year meeting of the Association of American Chambers of Commerce in Latin America (AACCLA).
With Caterpillar Chairman and CEO James Owens among the guests, Garcia also predicted a good outlook for the company. “Caterpillar tractors will continue to sell significantly in the country,” he said.
STRONG FIRST QUARTER
Peru’s GDP expanded by 6 percent in the first quarter – a strong increase compared to the 1.9 percent in the same quarter last year. That was also the second-highest growth rate among Latin America’s top seven economies. This year, the GDP will likely expand by a total of 6.6 percent, the central bank predicts. That compares with 0.9 percent last year.
Despite presidential elections coming up, officials are now reducing stimulus programs to avoid overheating, Garcia said. The elections are scheduled for April.
The strong growth outlook comes as Peru’s economy grew an average of 6 percent the past five years, Garcia said. "We chose realism and responsibility,” he said about his policies. “That allowed us to promote accelerated, inclusive, decentralized, and stable growth.”
Somewhat surprising, he also praised his predecessors – Alberto Fujimori and Alejandro Toledo - for implementing successful economic policies, although he criticized Fujimori for lacking democratic policies.
Garcia also predicted that the foreign direct investment stock in Peru would double the next five years.
Last year, FDI reached $4.8 billion, according to the central bank, which estimates it will grow to $5.3 billion this year.
Among foreign investors boosting their presence is Chile. Chilean retailer Cencosud is now planning to open several Paris outlets in Peru, competing with Chilean retailers Falabella and Ripley, according to a report in Gestion newspaper.
EXPORTS UP, POVERTY DOWN
Garcia also predicted that exports would reach $80 to $90 billion annually by 2021. That compares with $26.9 billion last year and an estimated $33.2 billion this year, according to Peru’s central bank.
He also predicted that poverty will fall from 34 percent today to 12 percent in 2021. Already, Peru has seen significant progress in reducing rates, he pointed out. Garcia also said his government had been able to create more than two million new jobs since assuming office in July 2006.
Garcia’s optimism is shared by local and foreign investors. Although one presidential candidate, Ollanta Humala, raises some concern, he trails behind two other candidates that espouse continued pro-market policies, they point out.
A poll published by El Comercio newspaper Sunday showed Keiko Fujimori (daughter of Alberto) with 22 percent support, while Lima mayor Luis Castaneda boasts 21 percent. Humala comes in third place with 13 percent, closely followed by former president Toledo at 12 percent.
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