Peru’s national statistic and technology bureau INEI ruled out that the country’s economy is overheating following a red hot 11.9 jump in the gross domestic product in June compared to same month last year, state news agency Andina reported.
“The overheating of an economy happens when demand exceeds the productive capacity,” INEI chief Renán Quispe said. “It is a process that can take numerous months, it can take at times one or two years.”
Peru’s economy expanded for the eleventh month in a row and reached a 21-month high in June.
The growth was led by the construction sector, which expanded by 22.7 percent in June. The manufacturing sector followed at 21.6 percent, while finance and insurance rose 11.6 percent, electricity and water 10.9 percent, commerce 10.7 percent, fishing 9.51 percent, mining and hydrocarbons 7.89 percent and agriculture 4.21 percent.
During the first half of 2010, Peru’s economy has grown by 8.03 percent.
Scotiabank analyst Pablo Nano said the economy is expected to continue to have strong growth into the third quarter. It should increase about 8 percent in Q3 compared to the same period in 2009 when the economy contracted by 0.4 percent.
“Neverthless, the high rates of expansion in the second and third quarters will be difficult to sustain going forward,” Nano said.
Peru’s economy is expected to slow down by the fourth quarter of the year.
“Peru is withdrawing its monetary stimulus and planning to decrease the fiscal impulse. The impact of this slow down will not be too significant, but it will have some repercussions in the fourth quarter of 2010 and, principally, in 2011.”
The GDP growth for July, Nano added, is expected to be strong, however not as robust as June’s expansion.
