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Economy | July 26, 2011 [ 13:23 ]

Over 30 pct of young people plan to start a business in Peru


LivinginPeru.com

peru
(Photo:Andina/ Carlos Lezama)
31.2% of young Peruvians plans to start a business in the next 12 months and is optimistic about the economic future of the country, according to the First National Youth Survey, sponsored by the National Youth Secretariat (Senaju).

96.6% of people, ranging in ages from 15 to 29, stated they were encouraged to start a business because of a desire to improve their income. The second most important factor was the "desire to be independent" (92.8%).

According to an article published in Andina, the survey reported that 3.9% of men and 5.4% of women between the ages of 25 and 29 already had an independent business.

Alvaro Quispe, secretary of Senaju, says the results showed the progress of entrepreneurship and the optimism of Peruvians who were fighting to get ahead economically, socially and politically.

The survey was conducted by Senaju and the National Statistics Institute (INEI) and was the first developed in the country and also included young peoples’ perception about the future of Peru for the next 10 years.

37.7% of respondents thought that by 2021 Peru would be a country with more opportunities 29.4% believed that Peru would be a developed country and 21.8 that it would be a country of entrepreneurs.

The study showed that 32.2% of young people were studying or had studied law, economics or business administration, 19.0% architecture, engineering or other related careers, 15.2% studied education and 9.9% studied medicine or related professions.

21.8% of young people were studying or had studied a technical career in electronics, engineering or other related careers, and 20.8% studied physics, chemistry, mathematics, statistics, computer science or other related fields.

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Economy | July 26, 2011 [ 12:23 ]

Peru’s domestic demand up 9.7 pct this year


LivinginPeru.com

peru
(Photo:Andina/Archive )
The Central Reserve Bank (BCR) has reported that domestic demand grew 7.5%, in the first five months of the year. Local news source Gestión reports, that this is due to increased private consumption and investment.

Sales in supermarkets and department stores grew 16.8 and 17.3% respectively.

Among products with higher production were goods such as bottled water, beer, detergents, evaporated milk, yogurt, soft drinks and energy drinks.

Industries that reported a decrease in growth were construction and capital goods related services, while sectors that produced inputs maintained their growth rates.

The BCR said the rate of utilization of installed capacity of non-primary manufacturing was 78% during May, an increase of four percentage points compared to May 2010.

This statistic is similar to a monthly survey of companies, about their macroeconomic expectations, which indicated a 78% level of utilization of installed capacity of non-primary manufacturing during the months of May and June.

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Economy | July 21, 2011 [ 4:08 ]

Opinion: Ollanta Humala - To be or not to be?


By Augusto Álvarez Rodrich for La República
Translated and edited by Jorge Riveros-Cayo

peru
Velarde is an "intelligent, honest and capable economist," according to Álvarez Rodrich, but he hardly will please Humala's die-hard allies within Gana Perú. (Photo: Jack Ramón)

Ollanta Humala’s intention of keeping Julio Velarde as the head of Peru’s Central Reserve Bank (BCR) during his administration is a good decision. At the same time, however, it raises some uncomfortable questions and a certain feeling of improvisation.

A disclaimer: The head of state does not appoint the president of the BCR but proposes a name to Congress that is ratified or vetoed. Likewise, the Executive and Congress appoint three members each to the BCR’s directory, making a total of seven members.

Julio Velarde is a magnificent election to conduct the financial and monetary policies. He is an intelligent, honest and capable economist who has headed the BCR with great skill during García’s administration (2006-2011). His permanence for five more years would be approved by the financial markets. So far the stock exchange raised five percent.

This is why two days after the first election (on April 12), when Humala started to trigger uncertainty in the markets, I suggested that ratifying Velarde at the BCR was a convenient move. This would give a sign of tranquility, along with the announcement of calling in the economic team of Toledo’s Perú Posible political party, as well as other independent professionals.

Something of this happened. Among those that supported Humala starting the runoff campaign was Óscar Dancourt, another smart, honest and capable economist. He also headed the BCR skillfully, between 2003 and 2006, during president Toledo’s administration.

Both – Velarde and Dancourt – can direct the BCR with the autonomy and independence that the position requires. To elect Velarde means a fast way to inject a doses of confidence to the markets. But that also implies to split the confidence of the team that backed up Humala during the campaign and the transition process. It doesn’t get better with the appointment of the finance ex-minister Miguel Castilla (who resigned last week), who is also another brilliant economist.

Velarde/Castilla is good news for the markets but bad news for Humala’s team. But that wouldn’t be a major problem if additionally the technical teams of the current administration and Gana Perú were not confronted. The reason: the constant struggles over a long list of issues that include raising the minimum wage, regulating AFP’s (retirement funds administrators), and admitting or denying if the García administration is leaving a frozen economy for the incoming government.

If Humala agreed with the criticisms made by his technical team to the current administration – not very justified in my opinion – why is he choosing to keep the finance vice minister and BCR president of García’s government? Or was he using the economy subject exclusively to discuss politics? This would obviously trigger another question: How interested is the president-elect in economic issues?



Augusto Álvarez Rodrich is a Peruvian economist and journalist, and has a daily political column in La República.

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Economy | July 20, 2011 [ 12:10 ]

Peru has opportunities to improve its rating, says Standard & Poor’s


Andina

peru
Standard & Poor's (Photo: Andina)
Rating agency Standard & Poor's (S&P) on Wednesday said that Peru has opportunities to improve its credit rating and highlighted that the reappointment of Julio Velarde as head of the Central Reserve Bank (BCR) is a good sign that the country’s monetary policy will remain stable.

Analyst Richard Francis noted that so far S&P is not planning to lower the rating of the Peruvian credit rating and said that the country has the opportunity to improve it.

In that sense, Francis noted that the rating could be raised if its policies don’t vary substantially.

The analyst went on to say that S&P knows that there will be some changes in Peru, but “there will be good news if the monetary, fiscal and environmental policies for investments are still favorable.”

“What we are expecting from the new government is its fiscal and monetary policies and to see if the investment environment remains favorable. This way, the reappointment of Julio Velarde as head of Peru’s Central Reserve Bank is a good sign that at least the monetary policy will remain stable,” noted Francis.

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Economy | July 20, 2011 [ 12:05 ]

U.S could double investments in Peru to $3.2 billion


LivinginPeru.com

peru
 (Photo: Andina/Archive/Jack Ramon )
Peruvian ambassador to the United States, Luis Valdivieso, has said that the U.S could double the flow of investments in Peru to $3.2 billion dollars annually, over the next five years.

“In the past two years, the rate of flow of U.S. investment in Peru was $1.6 billion dollars annually, and this could increase to $3.2 billion easily with intense promotion of investment," said Valdivieso, in an article published in Andina.

He mentioned that many U.S. companies already had projects underway; some already in the development stage, while others were waiting for the new government, in order to start.

"In the past, the average flow of U.S. investment in Peru has been less than 800 million per year and in 2009 it dropped significantly because of the international financial crisis, but now we are seeing these major investments return," he told Andina.

He said U.S. businesses are very interested in developing projects in Peru not only traditional and key sectors, such as mining, but also in the software industry, services, call centers, accounting and other productive sectors.

"In addition, the new Forestry Law will enable the development of the sector. We only export $300 million a year in wood, when in fact we have a potential of $3 billion to $3.5 billion, for a well-structured industry that respects the rights of indigenous people and the environment," he said.

Valdivieso also said there were good prospects for growth of Peruvian exports to the U.S. this year, which could increase by 27 percent.

He also commented that Peruvian investments in the U.S. also increased significantly, not only with the opening of new restaurants, but also in other sectors such as construction materials.

"Today there is a cement factory in Arizona that already has Peruvian investment. It is also interesting to see the number of Peruvians who are in positions in major U.S. companies, there is even a family that owns a newspaper in Washington," he said.

Valdivieso also noted that in the last two years Peruvian investments in the U.S. did not fall below $350 million.

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Economy | July 19, 2011 [ 9:23 ]

Peru’s exports to reach $43 billion this year


LivinginPeru.com

peru
Juan Varillas (Photo:Andina/Jessica Vicente )

Peru’s Association of Exporters (Adex) estimates exports will reach $43 billion by the end of this year.

The number is higher than the $35.4 billion estimate provided by the Peruvian government.

Juan Varilias, president of Adex, stated that Peruvian exports are being driven by non-traditional sectors, which are estimated to reach $10 billion in exports this year.

Varillas said there are currently seven thousand exporting firms, six thousand of which are small and medium companies.

The export sector involves 830,000 workers whose salaries are on average 12 percent higher than the national average wage.

"If we consider the indirect employment generated from the exporting industry, means 1.8 million workers and the well-being of 7 million Peruvians," said Varillas.

He added that this sector of the work force accounts for about 50 percent of the proceeds from income taxes.

Varillas stated that Peru currently exports 3,800 different types of products, from all sectors of the country, of which 3,700 are from non-traditional sectors.

According to the Ministry of Foreign Trade and Tourism exports from the month of May amounted to $3.8 billion, a 60 percent increase compared to the same month last year.

Between January and May 2011 the exports amounted to $17 billion dollars, 31% higher than those recorded in the same period in 2010.

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Economy | July 19, 2011 [ 8:34 ]

Peru's economy grew over 6 percent in June


LivinginPeru.com

peru
Ismael Benavides (Photo: Andina )
Ismael Benavides, Minister of  Finance, has stated that the Peruvian economy grew over six percent in June, down slightly from the %7.1 growth recorded in May.

Benavides said the fundamental reason for the decline was the slow-down in the performance of private investment.

"When there is lack of confidence that first thing to stop is investment decisions, it is important to reactivate these decisions," he said.

According to the National Statistics Institute, Peru's production activity increased 7.1% in May 2011, bringing the GDP to a growth of 8.04% between January and May of this year.

Based on these figures, Benavides reiterated that the Peruvian economy had a predicted growth of 7.5% for the first half of the year.

The figures were revealed during a seminar titled "The legislative and budget processes and government control", organized by the Ministry of Finance, the World Bank and the Comptroller General's Office

Benavides also mentioned that poverty fell from 48.7 to 31.3% between 2005 and 2010 and was on the way down to 30 percent by the end of July.

"In the case of employment, growth was historic in Peru with 2.3 million new jobs between 2006 and 2010, especially in companies with ten or more workers, where growth is almost 24%," he said.

Benavides added that by the end of July a record of 2.5 million new jobs is expected.

Family income also increased by almost 50% in the last five years, particularly in the poorest quintile, which recorded an increase of 74%.

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Economy | July 15, 2011 [ 9:14 ]

Peru’s Central Bank buys most dollars in year to slow sol gains


By John Quigley
Bloomberg.com


Peru’s central bank made its biggest dollar purchase in a year as local companies selling dollars to pay worker bonuses kept the sol at its highest level since 2008.

The central bank bought $276 million today, the most since July 2010, paying an average 2.7415 soles per dollar, it said on its website.

The sol strengthened less than 0.1 percent to 2.7410 per U.S. dollar at today’s close, from 2.7415 yesterday, according to Deutsche Bank’s local unit.

“Companies have until tomorrow to pay mid-year bonuses and those that have revenue in dollars have to sell them to pay bonuses,” said Roberto Flores, an economist at Lima-based brokerage Inteligo SAB. “The expiry of dollar forward contracts has been pressuring the sol in the last few days.”

Demand for soles also rose this week as Peruvian exporters led by mining companies paid local income taxes, causing the central bank to step up dollar purchases in the spot market. The bank bought $78 million yesterday and $79 million July 12.

The purchases helped reduce the net dollar holdings of Peruvian banks to $430 million on July 12 from $556 million a day earlier, according to the central bank.

Still, the banks’ dollar surplus will keep pressure on the sol, making Peruvian companies less competitive in the international market by making their goods more expensive in dollar terms, Peruvian exporter group Adex said in an e-mailed statement.

The central bank should take “special” measures to halt further appreciation in the sol, Adex said.

The yield on the nation’s benchmark 7.84 percent sol- denominated bond due August 2020 was little changed at 6.298 percent, according to prices compiled by Bloomberg.

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Economy | July 15, 2011 [ 8:54 ]

Peruvian exports to Brazil to reach $1.4 billion


LivinginPeru.com

peru
Eduardo Ferreyros (Photo: Juan Carlos Guzman Negrini/Andina )
The value of Peruvian goods exported to Brazil will reach $1.4 billion by year’s end.

So states Eduardo Ferreyros, who oversees Peru’s Ministry of Foreign Commerce and Tourism (Mincetur), in a report published in Andina.

“Brazil is the largest market in this part of the world” said Ferreyos, “and has immense potential.”

“Last year we exported close to $900 million USD to Brazil, and we have doubled shipments in the last decade,” he added. “This year they could total some $1.4 billion.”

Ferreyos emphasized that in the first five months of 2011, Peruvian exports to Brazil increased 80%, with the value of exports totaling $540 million.

The Commerce minister also noted that Peru’s textile industry has become one of the prime beneficiaries of the current export boom, and Peru not only expects continued growth in this sector, but in agriculture and fishing as well.

Ferreyos explained that Brazil has more than 150 million consumers, which represents a market full of opportunities. In addition, the Peruvian government has made the Brazilian market a top priority, now that both countries will be more closely working together as trading partners.

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Economy | July 13, 2011 [ 11:42 ]

Peruvian currency rises to highest level in three years


LivinginPeru.com

The value of the Peruvian sol has reached its highest level in three years, prompting Peru’s central bank to buy American currency.

As reported in Bloomberg News, the central bank purchased $79 million in the last seven weeks, in the spot currency market, at an average cost of 2.7420 soles per U.S. dollar.

According to data provided by Deutsche Bank, the sol went up 0.1% to 2.7420 for every U.S. dollar yesterday, from 2.7450 the previous day, reflecting the sol’s strongest gain since December 2008.

Mario Guerrerro, an economist with Scotiabank Peru stated that Peruvian export industries, principally mining, purchased soles to pay income taxes and worker bonuses. Meanwhile, Peru’s central bank reports that as of of July 8, a greater influx of American dollars into the local economy strengthened the net worth of Peruvian banks to a total of $497 million, compared with $347 million in the four days between July 1 and July 5.

Seasonal factors, said Guerrero, have resulted in a greater demand for soles. “We could see pressure on the sol,” he said, “for a few more days and therefore further purchases by the central bank.”

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