Country Report Peru May 2000 Updater

Economic forecast: Economic growth

Economic growth in Peru will accelerate to around 4.7% in 2000 and 2001 as domestic demand recovers from two years of contraction. Private fixed investment will drive growth initially, though consumption growth will also be strong.

Private investment will rebound strongly in 2000 and 2001 following the deep contraction that started in the second half of 1998. This will be helped by construction projects in the mining, energy, housing and tourism sectors, most importantly the Antamina copper and zinc mining complex, which will result in investment of US$725m in 2000 and US$872m in 2001 before coming on stream in 2002. Growth in fixed investment will slow after the completion of Antamina, but exports will remain dynamic throughout the forecast period. Private consumption growth will accelerate ahead of GDP growth as domestic demand recovers. On the supply side, mining and services -- particularly tourism and communications -- will be the main drivers of growth over the forecast period.

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