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Now Available: Peru Power Report Q2 2014

New Energy research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 04/14/2014 -- Peru is advancing its ambitious power sector expansion plans as demand for electricity continues to grow rapidly - driven by the needs of the country's energy-intensive mining industry and healthy growth in consumer demand. While our macroeconomic outlook for Peru remains below consensus based on our bearish stance on global metals prices, which is in turn a consequence of our belowconsensus view on economic growth in China, we maintain that the country's economy remains one of the most dynamic in Latin America. By extension, we forecast that Peru will register robust growth across all segments of its power sector thanks to continued efforts to mine and export its significant mineral wealth. We also note that the government is eager to stimulate investment in power infrastructure, and is working hard to generate interest in a host of attractive investment opportunities.

Key trends and developments in the Peruvian electricity market:

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- While we maintain our view that Peru will remain one of the most dynamic economies in Latin America over our forecast period, it is important to note that our macroeconomic outlook has long been belowconsensus and BMI's Country Risk team expects real GDP growth to continue to hover at around the 5.0% over our forecast period.
- Indeed, we revised down our 2013 real GDP growth projection to 4.8% in December 2013 and although we expect a modest acceleration in real GDP growth in 2014 - to 5.1% - as new mining projects come online and investment begins to pick up following more accommodative stance taken by the central bank, we emphasise that a return to the 6.0%-plus expansion rates registered between 2010 and 2012 is unlikely. This view is predicated on our bearish outlook for metals prices, which is in turn a consequence of our below-consensus view on economic growth in China, the world's largest copper consumer. Indeed, a slowdown in mining activity would not only damage the country's export-oriented economy but would also - by extension - have significant implications for our currently upbeat power sector forecasts.
- In this context, Peru's economy, which is heavily dependent on its exports of copper, silver, gold and other metals, clearly remains hostage to global demand. While we expect productivity in the mining sector to improve over the coming quarters, subdued demand for key metals exports will continue to weigh on Peru's net exports - with the country posting a trade deficit for the first time in over a decade in 2013. In addition, following a substantial currency sell-off in recent months, we believe that a weaker sol is likely to weigh on consumer purchasing power and dampen sentiment, leading to more moderate real private consumption growth.

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