New Market Research Report: Peru Business Forecast Report Q1 2011

Recently published research from Business Monitor International, "Peru Business Forecast Report Q1 2011", is now available at Fast Market Research
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Jan. 7, 2011 - PRLog -- Growth To Slow, But Investment Potential To Remain

Peru's economy continues to stand out as one of the strongest performers across the emerging market sphere, and while there are still some risks to its growth trajectory over the next 12 months, we believe the outlook remains one of sound fundamentals and massive investment potential. In the Peru Business Forecast Report Q111, we take a closer look at the medium-term risks to growth, which will be determined both by the performance of the global economy as well as events closer to home, such as the April 2011 presidential election. Growth is set to remain strong, averaging 5.3% over our ten-year forecast period, and as such our core view remains that Peru will continue along its longer-term path of developed state convergence, providing significant opportunities for investors along the way.

The results of October's local elections in Peru have made the outcome of the forthcoming presidential and congressional elections even more difficult to call, as none of the major political parties performed well. While local and left-wing candidates dominated in the local elections, our core view remains for a centre-right candidate to succeed Garcia as president in April 2011. This suggests broad continuity of the current business-friendly policy mix, which bodes well for investors and for Peru's economic growth trajectory over the coming years. However, ongoing social unrest continues to weigh on Peru's political risk profile and is a potential concern for international investors, particularly as much of the unrest is associated with protests against mining projects and other industrial developments in rural and tribal regions.

On the economic front, Peru's growth story continues to impress and we maintain our view that the economy will be a regional outperformer in 2011, supported in large part by robust domestic demand and fixed capital formation. That said, we caution that there remains the risk of a further global slowdown, which would hit demand for Peruvian exports and reduce investment inflows, posing a downside risk to our otherwise bullish outlook for the economy. Nevertheless, beyond the medium term, we believe that the country's strong fundamentals, which include a stable banking sector, sound public finances and a gradually improving political environment, will help to bolster underlying economic stability over the duration of our forecast period.

On the monetary policy front, the outlook is being blurred somewhat by exchange rate intervention, which is making it harder to call interest rate trajectory as it is not entirely clear whether the central bank's foremost concern is inflation or currency appreciation. That said, we believe that robust economic growth combined with rapidly expanding private credit will make a resumption of monetary tightening highly likely in 2011. As such, we anticipate a further 50 basis points of hikes before end-2011, taking the policy rate to 3.50%, with an additional 50 basis points in 2012.

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About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets.  BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports.  Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports.  View more research from Business Monitor International at

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.
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