PREVIEW-Peru’s economy seen growing 10.9 pct in June

WHAT: Peru’s economic growth rate for June

WHEN: Monday, Aug. 16, 12 pm EST, 11 am local time

OUTCOME: 10.9 percent year-over-year growth

REUTERS FORECAST:

Peru should post 10.9 percent growth in June on gains in
construction, non-primary manufacturing and domestic commerce,
according to the median forecast of eight economists surveyed
by Reuters.

June’s growth rate would exceed May’s 9.19 percent
expansion and compares with a 2.5 percent contraction in June
2009.

A double-digit result would be the biggest since September
2008, when the Andean country’s economy grew 11.6 percent from
the same month a year earlier.

“The strong dynamism in public spending, which rose 22
percent in June, will be the principle reason for GDP growth,
given its impact on the construction and service industries,”
said Inteligo SAB economist Roberto Flores.

Among the world’s largest minerals exporters, Peru’s
construction sector grew 23 percent in June, while
manufacturing registered a 14.8 percent gain. Domestic commerce
expanded by 12 percent.

FACTORS TO WATCH:

Peru’s economy has been surging for much of the last 15
years. In the early years of the boom, exports led the broader
economy, but in the last few quarters, domestic demand, buoyed
by a government stimulus package, has been leading growth. If
exports recover, growth could exceed forecasts. [ID:
nN27105926]

MARKET IMPACT:

Peru’s central bank may further raise its benchmark
interest rate to cool the economy. It has already raised rates
four times this year to 2.5 percent.

A flood of foreign capital into Peru has pushed the sol
(PEN=PE: ) to a two-year high of 2.80.

The central bank has repeatedly intervened on the local
foreign exchange market this year to soak up excess liquidity,
buying nearly $6 billion to temper volatility, which could lead
to inflation if the sol were to suddenly reverse direction
after excessive strengthening. [nN10154633]
(Reporting by Ursula Scollo. Writing by Emily Schmall.
Editing by Diane Craft)

PREVIEW-Peru’s economy seen growing 10.9 pct in June