"Peru Shipping Report Q2 2011" is now available at Fast Market Research

April 16, 2011 - PRLog -- BMI is expecting strong growth in Peru during 2011 and is also bullish about the medium-term outlook. This means the operating environment for the ports and shipping sector should be supportive. Admittedly, there is a big political risk factor as presidential elections are due in April. That said, we project the winner will be former President Alejandro Toledo, a centre-right candidate with a proven track record in market-friendly macroeconomic management. As president in 2001-2006 Toledo achieved average annual GDP growth of 6.0%, low annual inflation (1.5%), a narrowing of the fiscal deficit, and free-trade agreements. His enthusiasm for high levels of infrastructure investment is noteworthy, and was designed to support the country's medium-term export-led growth prospects. After strong GDP growth in 2010 we believe the country will have slightly slower, but still impressive expansion rates in 2011. Fixed investment has been making the strongest contribution to GDP, but in the medium term we believe private sector consumption will increase as income levels rise and unemployment falls. While net exports have been a drag on growth, in the medium term Peru's commodity exports connect it to the China growth story. Based on our analysis, BMI forecasts 2011 GDP growth of 6.2% in Peru, compared to a deceleration on the 8.5% growth rate achieved in 2010. We expect growth to ease further to 4.9% in 2012 and to remain in the 4-5% band in subsequent years. As a result in the five years to 2015 we expect growth to average 5.3% per annum.

Headline Industry Data

?? Total Peruvian trade (imports + exports) will remain vigorous in 2011: BMI predicts real term growth of 8.3%, compared to 9.8% in 2010 ?? We are projecting box traffic at Callao to grow 12.3% this year to 1.022mnTEUs ?? Gross tonnage at Callao will also be positive (+6.5% to 18.572mn tonnes)

Key Industry Trends

Labour unrest at the Port of Callao continues to be a concern. Port operations were disrupted by strike action at Muelle Norte in late January and continued in early February. The dispute was politicised, with labour unions and opposition parties seeking to challenge plans to award a private sector concession to run the terminal. There were also separate concerns that the concession might be awarded to DP World, which already operates a terminal and would therefore have a potentially monopolistic or quasimonopolistic position in Callao.

The demands of growing mineral exports and trade with Asia require greater investment in Peruvian port infrastructure. According to a report by the Lima Chamber of Commerce, about US$2bn needs to be invested in improving the quality of Peru's ports. Peru is ranked 113th out of 133 countries for quality of port infrastructure, according to the World Economic Forum's Global Competitiveness Report (although admittedly this represents a jump of 13 places compared to an earlier report a year ago).

South America's Pacific ports have decided to come together in a strategic alliance and to share technical information. Mario Arbulu, president of Peru's state-owned ports operator Enapu, was appointed as president of the new group, called the South American Pacific Port Community (Copasud).

Key Risks to Outlook

BMI believes risks to our Peruvian port and shipping forecasts are evenly poised. There is an upside risk that, based on a fairly smooth electoral process and transition to a new administration, particularly if it is led by Alejandro Toledo, a positive private sector and foreign investor response will boost 2011 growth prospects and increase demand for the services of the ports and shipping sector. The downside risk is the April elections will result in increased political and trade union protests, and coupled perhaps with some inflationary pressure this will force greater-than-expected monetary tightening and slower growth, with adverse knock-on effects for the industry. In our view these two risks currently tend to offset each other.

For more information or to purchase this report, go to:
-  http://www.fastmr.com/prod/130687_peru_shipping_report_q2...

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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.